68444 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Parts 9, 122, 123, 124, and 125 

[OW–2004–0002, FRL–7834–7] 

RIN 2040–AD70 

National Pollutant Discharge 

Elimination System—Proposed 

Regulations To Establish 

Requirements for Cooling Water Intake 

Structures at Phase III Facilities

AGENCY: Environmental Protection 

Agency (EPA).

ACTION: Proposed rule.

SUMMARY: Today’s proposed rule would 

establish national categorical 

requirements under section 316(b) of the 

Clean Water Act for certain existing 

facilities that employ a cooling water 

intake structure and are designed to 

withdraw water above a certain design 

intake flow from certain waters of the 

United States for cooling purposes. 

Today’s notice proposes three possible 

options for defining which existing 

facilities would be subject to uniform 

national requirements, based on design 

intake flow threshold and source 

waterbody type: The facility has a total 

design intake flow of 50 million gallons 

per day (MGD) or more, and withdraws 

from any waterbody; the facility has a 

total design intake flow of 200 MGD or 

more, and withdraws from any 

waterbody; or the facility has a total 

design intake flow of 100 MGD or more 

and withdraws water specifically from 

an ocean, estuary, tidal river, or one of 

the Great Lakes. Because the lowest coproposed flow threshold option is 50 

MGD, the proposed requirements would 

only apply to manufacturing facilities—

as power producers with a flow greater 

than 50 MGD are regulated under the 

Phase II rule. This proposed rule would 

constitute Phase III of EPA’s section 

316(b) regulation development and 

would establish national requirements, 

and procedures for implementing those 

requirements, applicable to the location, 

design, construction, and capacity of 

cooling water intake structures at Phase 

III facilities. Today’s proposed rule 

would also establish categorical section 

316(b) requirements for new offshore oil 

and gas extraction facilities, which were 

specifically excluded from the scope of 

the Phase I new facility rule so that EPA 

could gather additional data on these 

facilities. The proposed rule would 

apply to both existing manufacturers 

and new offshore oil and gas extraction 

facilities that withdraw at least 25 

percent of the water exclusively for 

cooling purposes. 

The proposed national requirements, 

which would be implemented through 

National Pollutant Discharge 

Elimination System (NPDES) permits, 

are based on the best technology 

available to minimize the adverse 

environmental impact associated with 

the use of cooling water intake 

structures. For covered existing 

facilities, today’s proposed rule would 

establish performance standards for 

reducing impingement mortality by 80 

to 95 percent, or impingement mortality 

by 80 to 95 percent and entrainment by 

60 to 90 percent. Today’s proposal 

would allow existing facilities to select 

from five compliance alternatives 

consistent with those provided in the 

final Phase II rule for existing large flow 

electric power generators. Once 

finalized and implemented, the rule 

would minimize the adverse 

environmental impact of cooling water 

intake structures by reducing the 

number of aquatic organisms lost as a 

result of water withdrawals associated 

with these structures. 

Today’s proposed rule does not 

propose to alter the regulatory 

requirements for facilities subject to the 

Phase I or Phase II regulations, and EPA 

is not soliciting comment on those 

regulations. EPA is only seeking 

comment on the proposed regulations 

for Phase III existing facilities and new 

offshore oil and gas facilities, as 

reflected in the proposed regulatory text 

for subparts K and N. Depending on the 

options selected in the final section 

316(b) regulation for Phase III facilities, 

EPA may decide to integrate the 

regulatory text for subparts K and N 

proposed today into the existing 

subparts I and J, for purposes of 

streamlining the number of pages for 

publication.

DATES: Comments must be received on 

or before March 24, 2005.

ADDRESSES: Submit your comments, 

identified by Docket ID No. OW–2004–

0002, by one of the following methods: 

I. Federal eRulemaking Portal: http://

www.regulations.gov. Follow the on-line 

instructions for submitting comments. 

II. Agency Web site: http://

www.epa.gov/edocket. EDOCKET, EPA’s 

electronic public docket and comment 

system, is EPA’s preferred method for 

receiving comments. Follow the on-line 

instructions for submitting comments. 

III. E-mail: OW–Docket@epa.gov. 

IV. Mail: Water Docket, 

Environmental Protection Agency, 

Mailcode: 4101T, 1200 Pennsylvania 

Ave., NW., Washington, DC 20460, 

Attention Docket ID No. OW–2004–

0002. Please include a total of 3 copies. 

In addition, please mail a copy of your 

comments on the information collection 

provisions to the Office of Information 

and Regulatory Affairs, Office of 

Management and Budget (OMB), Attn: 

Desk Officer for EPA, 725 17th St. NW., 

Washington, DC 20503. 

V. Hand Delivery: Water Docket, EPA 

Docket Center, EPA West, Room B102, 

1301 Constitution Ave., NW., 

Washington, DC, Attention Docket ID 

No. OW–2004–0002. Such deliveries are 

only accepted during the Docket’s 

normal hours of operation, and special 

arrangements should be made for 

deliveries of boxed information. 

Instructions: Direct your comments to 

Docket ID No. OW–2004–0002. EPA’s 

policy is that all comments received 

will be included in the public docket 

without change and may be made 

available online at http://www.epa.gov/

edocket, including any personal 

information provided, unless the 

comment includes information claimed 

to be Confidential Business Information 

(CBI) or other information whose 

disclosure is restricted by statute. Do 

not submit information that you 

consider to be CBI or otherwise 

protected through EDOCKET, 

regulations.gov, or e-mail. The EPA 

EDOCKET and the regulations.gov 

websites are ‘‘anonymous access’’ 

systems, which means EPA will not 

know your identity or contact 

information unless you provide it in the 

body of your comment. If you send an 

e-mail comment directly to EPA without 

going through EDOCKET or 

regulations.gov, your e-mail address 

will be automatically captured and 

included as part of the comment that is 

placed in the public docket and made 

available on the Internet. If you submit 

an electronic comment, EPA 

recommends that you include your 

name and other contact information in 

the body of your comment and with any 

disk or CD-ROM you submit. If EPA 

cannot read your comment due to 

technical difficulties and cannot contact 

you for clarification, EPA may not be 

able to consider your comment. 

Electronic files should avoid the use of 

special characters, any form of 

encryption, and be free of any defects or 

viruses. For additional information 

about EPA’s public docket visit 

EDOCKET on-line or see the Federal 

Register of May 31, 2002 (67 FR 38102). 

For additional instructions on 

submitting comments, go to section B of 

the SUPPLEMENTARY INFORMATION section 

of this document. 

Docket: All documents in the docket 

are listed in the EDOCKET index at 

http://www.epa.gov/edocket. Although 

listed in the index, some information is 

not publicly available, i.e., CBI or other 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68445

information whose disclosure is 

restricted by statute. Certain other 

material, such as copyrighted material, 

is not placed on the Internet and will be 

publicly available only in hard copy 

form. Publicly available docket 

materials are available either 

electronically in EDOCKET or in hard 

copy at the Water Docket, EPA/DC, EPA 

West, Room B102, 1301 Constitution 

Ave., NW., Washington, DC. The Public 

Reading Room is open from 8:30 a.m. to 

4:30 p.m., Monday through Friday, 

excluding legal holidays. The telephone 

number for the Public Reading Room is 

(202) 566–1744, and the telephone 

number for the Water Docket is (202) 

566–2426.

FOR FURTHER INFORMATION CONTACT: For 

additional technical information contact 

Martha Segall at (202) 566–1041 or Paul 

Shriner at (202) 566–1076. For 

economic information, contact Erik 

Helm at (202) 566–1066. For biological 

information contact Ashley Allen at 

(202) 566–1012. The address for the 

above contacts is: Office of Science and 

Technology, Engineering Analysis 

Division (Mailcode 4303T), 

Environmental Protection Agency, 1200 

Pennsylvania Ave., NW., Washington, 

DC 20460; fax number: (202) 566–1053; 

e-mail address: rule.316b@epa.gov.

SUPPLEMENTARY INFORMATION: 

General Information 

A. What Entities Are Regulated by This 

Action? 

This proposed rule would apply to 

‘‘Phase III existing facilities’’—i.e., 

certain existing manufacturing and 

industrial facilities that are: (1) Point 

sources; (2) use or propose to use one 

or more cooling water intake structures; 

(3) are designed to withdraw water 

above a certain threshold from certain 

waters of the U.S. (the flow threshold 

would differ depending on the 

regulatory option selected in the final 

rule); and (4) use at least 25 percent of 

water withdrawn exclusively for cooling 

purposes. Depending on the regulatory 

option selected, the facility would be 

subject to these national requirements if 

it had a design intake flow of: (1) 50 

MGD or more from any waterbody; (2) 

200 MGD or more from any waterbody; 

or (3) 100 MGD or more from an ocean, 

estuary, tidal river, or one of the Great 

Lakes. This proposed rule would define 

‘‘existing facility’’ as any manufacturing 

or industrial facility that commenced 

construction on or before January 17, 

2002 (or [60 days from publication of 

the final rule] for an offshore oil and gas 

extraction facility), and any 

modification of, or any addition of a 

unit at such a facility that does not meet 

the definition of a new facility at 

§ 125.83.

This proposed rule would also apply 

to new offshore and coastal oil and gas 

extraction facilities, which were 

specifically excluded from the Phase I 

new facility rule. An offshore and 

coastal oil and gas extraction facility is 

new if construction commenced after 60 

days from publication of the final rule. 

Exhibit 1 provides examples of 

industrial facility types potentially 

regulated by this proposed rule.

EXHIBIT 1.—EXAMPLES OF INDUSTRIAL FACILITY TYPES POTENTIALLY REGULATED BY THIS PROPOSED RULE

Category Examples of potentially regulated entities Standard industrial

classification codes 

North American industry 

codes (NAIC) 

Federal, State and 

local government.

Operators of steam electric generating point source dischargers that employ cooling water intake structures.4911 and 493 ....................... 221111, 221112, 221113, 

221119, 221121, 221122 

Industry ................. Operators of industrial point source dischargers that employ 

cooling water intake structures..

See below ............................ See below 

Agricultural production ............................................................ 0133 ..................................... 111991, 11193 

Metal mining ............................................................................ 1011 ..................................... 21221 

Oil and gas extraction ............................................................. 1311, 1321 ........................... 211111, 211112 

Mining and quarrying of nonmetallic minerals ........................ 1474 ..................................... 212391 

Food and kindred products ..................................................... 2046, 2061, 2062, 2063, 

2075, 2085.

311221, 311311, 311312, 

311313, 311222, 311225, 

31214 

Tobacco products .................................................................... 2141 ..................................... 312229, 31221 

Textile mill products ................................................................ 2211 ..................................... 31321 

Lumber and wood products, except furniture ......................... 2415, 2421, 2436, 2493 ....... 321912,321113, 321918, 

321999, 321212, 321219 

Paper and allied products ....................................................... 2611, 2621, 2631, 2676 ....... 3221, 322121, 32213, 

322121, 322122, 32213, 

322291 

Chemical and allied products .................................................. 28 (except 2895, 2893, 

2851, and 2879).

325 (except 325182, 32591, 

32551, 32532) 

Petroleum refining and related industries ............................... 2911, 2999 ........................... 32411, 324199 

Rubber and miscellaneous plastics products ......................... 3011, 3069 ........................... 326211, 31332, 326192, 

326299 

Stone, clay, glass, and concrete products .............................. 3241 ..................................... 32731 

Primary metal industries ......................................................... 3312, 3313, 3315, 3316, 

3317, 3334, 3339, 3353, 

3363, 3365, 3366.

324199, 331111, 331112, 

331492, 331222, 332618, 

331221, 22121, 331312, 

331419, 331315, 331521, 

331524, 331525 

Fabricated metal products, except machinery and transportation equipment.3421, 3499 ........................... 332211, 337215, 332117, 

332439, 33251, 332919, 

339914, 332999 

Industrial and commercial machinery and computer equipment.3523, 3531 ........................... 333111, 332323, 332212, 

333922, 22651, 333923, 

33312 

Transportation equipment ....................................................... 3724, 3743, 3764 ................. 336412, 333911, 33651, 

336416 

68446 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

EXHIBIT 1.—EXAMPLES OF INDUSTRIAL FACILITY TYPES POTENTIALLY REGULATED BY THIS PROPOSED RULE—Continued

Category Examples of potentially regulated entities Standard industrial

classification codes 

North American industry 

codes (NAIC) 

Measuring, analyzing, and controlling instruments; photographic, medical, and optical goods; watches and clocks.3861 ..................................... 333315, 325992 

Electric, gas, and sanitary services ........................................ 4911, 4931, 4939, 4961 ....... 221111, 221112, 221113, 

221119, 221121, 221122, 

22121, 22133 

Educational services ............................................................... 8221 ..................................... 61131 

Engineering, accounting, research, management and related 

services.

8731 ..................................... 54171 

This exhibit is not intended to be 

exhaustive, but rather provides a guide 

for readers regarding entities that may 

be regulated by this action if they satisfy 

the final flow threshold and waterbody 

type criteria. This exhibit lists the types 

of entities that EPA is now aware could 

potentially be regulated by this action. 

Other types of entities not listed in the 

exhibit could also be regulated. To 

determine whether your facility is 

regulated by this action, you should 

carefully examine the applicability 

criteria in § 125.101 and § 125.131 of 

this proposal. If you have questions 

regarding the applicability of this action 

to a particular entity, consult the 

persons listed for technical information 

in the FOR FURTHER INFORMATION

CONTACT section. 

B. What Should I Consider as I Prepare 

My Comments for EPA?

1. Submitting Confidential Business 

Information (CBI). Do not submit 

information that you consider to be CBI 

electronically through EPA’s electronic 

public docket or by e-mail. Send 

information claimed as CBI by mail only 

to the following address, Office of 

Science and Technology, Mailcode 

4303T, U.S. Environmental Protection 

Agency, 1200 Pennsylvania Ave., NW., 

Washington, DC 20460, Attention: 

Ahmar Siddiqui /Docket ID No. OW–

2004–0002. You may claim information 

that you submit to EPA as CBI by 

marking any part or all of that 

information as CBI (if you submit CBI 

on disk or CD ROM, mark the outside 

of the disk or CD ROM as CBI and then 

identify electronically within the disk or 

CD ROM the specific information that is 

CBI). Information so marked will not be 

disclosed except in accordance with 

procedures set forth in 40 CFR Part 2. 

In addition to one complete version of 

the comment that includes any 

information claimed as CBI, a copy of 

the comment that does not contain the 

information claimed as CBI must be 

submitted for inclusion in the public 

docket and EPA’s electronic public 

docket. If you submit the copy that does 

not contain CBI on disk or CD ROM, 

mark the outside of the disk or CD ROM 

clearly that it does not contain CBI. 

Information not marked as CBI will be 

included in the public docket and EPA’s 

electronic public docket without prior 

notice. If you have any questions about 

CBI or the procedures for claiming CBI, 

please consult the person identified in 

the FOR FURTHER INFORMATION CONTACT

section. 

2. Tips for Preparing Your Comments. 

When submitting comments, remember 

to: 

I. Identify the rulemaking by docket 

number and other identifying 

information (subject heading, Federal 

Register date and page number). 

II. Follow directions—The agency 

may ask you to respond to specific 

questions or organize comments by 

referencing a Code of Federal 

Regulations (CFR) part or section 

number. 

III. Explain why you agree or disagree; 

suggest alternatives and substitute 

language for your requested changes. 

IV. Describe any assumptions and 

provide any technical information and/

or data that you used. 

IV. If you estimate potential costs or 

burdens, explain how you arrived at 

your estimate in sufficient detail to 

allow for it to be reproduced. 

V. Provide specific examples to 

illustrate your concerns, and suggest 

alternatives. 

VI. Explain your views as clearly as 

possible, avoiding the use of profanity 

or personal threats. 

VII. Make sure to submit your 

comments by the comment period 

deadline identified. 

C. Supporting Documentation 

The proposed regulation is supported 

by three major documents: 

1. Economic Analysis for the 

Proposed Section 316(b) Rule for Phase 

III Facilities (EPA–821–R–04–016), 

hereafter referred to as the Economic 

Analysis (EA). This document presents 

the analysis of compliance costs, 

closures, energy supply effects, and 

benefits associated with the final rule. 

2. Regional Benefits Assessment for 

the Proposed Section 316(b) Rule for 

Phase III Facilities (EPA–821–R–04–

017), hereafter referred to as the 

Regional Analysis Document or the 

Regional Study(ies) Document. This 

document examines cooling water 

intake structure impacts and regulatory 

benefits at the regional level. 

3. Technical Development Document 

for the Proposed Section 316(b) Rule for 

Phase III Facilities (EPA–821–R–04–

015), hereafter referred to as the 

Technical Development Document. This 

document presents detailed information 

on the methods used to develop unit 

costs and describes the set of 

technologies that may be used to meet 

the final rule’s requirements. 

D. Table of Contents

General Information 

A. What Entities Are Regulated By This 

Action? 

B. What Should I Consider as I Prepare My 

Comments for EPA? 

C. Supporting Documentation 

D. Table of Contents 

I. Legal Authority, Purpose, and Background 

of Today’s Regulation 

A. Legal Authority 

B. Purpose of Today’s Proposed Regulation 

C. Background 

II. Scope and Applicability of the Proposed 

Rule 

A. What is a ‘‘New’’ Offshore Oil and Gas 

Extraction Facility for Purposes of the 

Section 316(b) Proposed Phase III Rule? 

B. What is an ‘‘Existing Facility’’ for 

Purposes of the Section 316(b) Proposed 

Phase III Rule? 

C. What is ‘‘Cooling Water’’ and What is a 

‘‘Cooling Water Intake Structure?’’

D. Would My Facility Be Covered if It 

Withdraws from Waters of the United 

States? 

E. Would My Facility Be Covered if It is 

a Point Source Discharger? 

F. What are the Cooling Water Use and 

Design Intake Flow Thresholds in this 

Proposed Rule? 

G. When Would a Phase III Existing 

Facility and New Offshore Oil and Gas 

Extraction Facility Be Required to 

Comply With Any New 316(b) 

Requirements? 

H. What Special Definitions Apply to This 

Proposal? 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68447

III. Summary of Data Collection Activities 

A. Survey Questionnaires 

B. Existing Data Sources 

C. Data Provided to EPA by Industrial, 

Trade, Consulting, Scientific or 

Environmental Organizations or by the 

General Public 

IV. Overview of Facility Characteristics 

(Cooling Water Systems & Intake 

Structures) for Industries Potentially 

Subject to Proposed Rule

A. Overview of Potentially Regulated Phase 

III Universe 

B. Existing Manufacturers and Industrial 

Facilities Potentially Subject to Proposed 

National Requirements 

C. New Offshore Oil and Gas Facilities 

Subject to Proposed National 

Requirements 

V. Environmental Impacts Associated With 

Cooling Water Intake Structures 

VI. Basis for the Proposed Requirements 

A. What is the Best Technology Available 

for Minimizing Adverse Environmental 

Impact at Phase III Existing Facilities? 

B. Economic Practicability 

C. What is the Proposed Role of Restoration 

and Trading? 

VII. Implementation 

A. When Would the Proposed Rule Become 

Effective? 

B. What General Information Would I Be 

Required to Submit to the Director When 

I Apply for My Reissued NPDES Permit? 

C. Phase III Existing Facility 

Implementation 

D. New Offshore Oil and Gas Extraction 

Facilities 

E. What Are the Respective Federal, State, 

and Tribal Roles? 

F. Are Permits for Phase III Facilities 

Subject to Requirements Under Other 

Federal Statutes? 

VIII. Economic Impact Analysis 

A. Existing Phase III Facilities: 

Manufacturers and Electric Power 

Producers 

B. New Offshore Oil and Gas Extraction 

Facilities 

C. Summary of Total Social Costs and 

Impacts 

IX. Benefits Analysis 

A. Introduction 

B. Study Design and Methods 

C. Impingement and Entrainment 

D. National Benefits 

X. Comparison of Benefits and Costs 

A. Benefit-Cost Analysis 

B. Break-even Analysis 

XI. Statutory and Executive Order Reviews 

A. E.O. 12866: Regulatory Planning and 

Review 

B. Paperwork Reduction Act 

C. Regulatory Flexibility Act 

D. Unfunded Mandates Reform Act 

E. Executive Order 13132: Federalism 

F. E.O. 13175: Consultation and 

Coordination With Indian Tribal 

Governments 

G. E.O. 13045: Protection of Children From 

Environmental Health Risks and Safety 

Risks 

H. Executive Order 13211: Actions that 

Significantly Affect Energy Supply, 

Distribution, or Use 

I. National Technology Transfer and 

Advancement Act 

J. E.O. 12898: Federal Actions to Address 

Environmental Justice in Minority 

Populations and Low-Income 

Populations 

K. E.O. 13158: Marine Protected Areas 

L. Plain Language Directive

I. Legal Authority, Purpose, and 

Background of Today’s Regulation 

A. Legal Authority 

Today’s proposed rule is issued under 

the authority of sections 101, 301, 304, 

306, 308, 316, 401, 402, 501, and 510 of 

the Clean Water Act, 33 U.S.C. 1251, 

1311, 1314, 1316, 1318, 1326, 1341, 

1342, 1361, and 1370. Publication of 

this proposed rule fulfills an obligation 

of the U.S. Environmental Protection 

Agency (EPA) under a consent decree in 

Riverkeeper, Inc. v. Leavitt, No. 93 Civ. 

0314, (S.D.N.Y). 

B. Purpose of Today’s Proposed 

Regulation 

Section 316(b) of the Clean Water Act 

provides that any standard established 

pursuant to section 301 or 306 of the 

Clean Water Act and applicable to a 

point source must require that the 

location, design, construction, and 

capacity of cooling water intake 

structures reflect the best technology 

available for minimizing adverse 

environmental impact. Today’s 

proposed rule would establish 

requirements reflecting the best 

technology available for minimizing 

adverse environmental impact, 

applicable to the location, design, 

construction, and capacity of cooling 

water intake structures at Phase III 

facilities (Phase I and Phase II are 

described in section I. C of today’s 

preamble). Today’s notice proposes the 

following three possible options for 

defining which existing facilities would 

be subject to categorical national 

requirements based on the design intake 

flow of cooling water intake structures 

at a facility and waterbody type: (1) The 

facility has a total design intake flow of 

50 million gallons per day (MGD) or 

more and withdraws from any 

waterbody; (2) the facility has a total 

design intake flow of 200 MGD or more 

and withdraws from any waterbody; or 

(3) the facility has a total design intake 

flow of 100 MGD or more and 

withdraws water specifically from an 

ocean, estuary, tidal river, or one of the 

Great Lakes. Today’s notice also 

proposes a design intake flow threshold 

of greater than 2 MGD for new offshore 

oil and gas extraction facilities 

consistent with the design intake flow 

threshold for new facilities in the Phase 

I rule. Under each of these co-proposed 

regulatory options, a Phase III facility 

must use at least 25 percent of the water 

withdrawn exclusively for cooling 

purposes and meet other specified 

criteria in order to be within the scope 

of the rule (see Section II—Scope and 

Applicability of Proposed Rule). 

C. Background 

1. The Clean Water Act 

The Federal Water Pollution Control 

Act, also known as the Clean Water Act 

(CWA), 33 U.S.C. 1251 et seq., seeks to 

‘‘restore and maintain the chemical, 

physical, and biological integrity of the 

nation’s waters.’’ 33 U.S.C. 1251(a). The 

Clean Water Act establishes a 

comprehensive regulatory program, key 

elements of which are: (1) A prohibition 

on the discharge of pollutants from 

point sources to waters of the United 

States, except as authorized by the 

statute; (2) authority for EPA or 

authorized States or Tribes to issue 

National Pollutant Discharge 

Elimination System (NPDES) permits 

that regulate the discharge of pollutants; 

and, (3) requirements for limitations in 

NPDES permits based on effluent 

limitations guidelines and standards 

and water quality standards.

Section 316(b) addresses the adverse 

environmental impact caused by the 

intake of cooling water, not discharges 

into water. Despite this special focus, 

the requirements of section 316(b) are 

closely linked to several of the core 

elements of the NPDES permit program 

established under section 402 of the 

Clean Water Act to control discharges of 

pollutants into navigable waters. For 

example, while effluent limitations 

apply to the discharge of pollutants by 

NPDES-permitted point sources to 

waters of the United States, section 

316(b) applies to facilities subject to 

NPDES requirements that withdraw 

water from waters of the United States 

for cooling and that use a cooling water 

intake structure to do so. 

Section 402 of the Clean Water Act 

provides authority for EPA or an 

authorized State or Tribe to issue an 

NPDES permit to any person 

discharging any pollutant or 

combination of pollutants from a point 

source into waters of the United States. 

Forty-five States and one U.S. territory 

are currently authorized under section 

402(b) to administer the NPDES 

permitting program. NPDES permits 

restrict the types and amounts of 

pollutants, including heat, that may be 

discharged from various industrial, 

commercial, and other sources of 

wastewater. These permits control the 

discharge of pollutants primarily by 

requiring dischargers to meet effluent 

limitations established pursuant to 

section 301 or section 306. Effluent 

68448 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

limitations may be based on Federal 

effluent limitations guidelines, new 

source performance standards, or the 

best professional judgment of the permit 

writer. Limitations based on these 

guidelines, standards, or best 

professional judgment are known as 

technology-based effluent limits. Where 

technology-based effluent limits are 

inadequate to ensure attainment of 

water quality standards applicable to 

the receiving water, section 301(b)(1)(C) 

of the Clean Water Act requires permits 

to include more stringent limits based 

on applicable water quality standards. 

NPDES permits also routinely include 

monitoring and reporting requirements, 

standard conditions, and special 

conditions. In addition, NPDES permits 

contain conditions to implement the 

requirements of section 316(b). Section 

301 of the Clean Water Act prohibits the 

discharge of any pollutant by any 

person, except in compliance with 

specified statutory requirements, 

including section 402. 

Section 510 of the Clean Water Act 

provides that, except as provided in the 

Clean Water Act, nothing in the Act 

shall preclude or deny the right of any 

State or political subdivision thereof to 

adopt or enforce any requirement 

respecting control or abatement of 

pollution; except that if a limitation, 

prohibition or standard of performance 

is in effect under the Clean Water Act, 

such State or political subdivision may 

not adopt or enforce any other 

limitation, prohibition or standard of 

performance which is less stringent than 

the limitation, prohibition or standard 

of performance under the Act. EPA 

interprets this to reserve for the States 

authority to implement requirements 

that are more stringent than the Federal 

requirements under State law. PUD No. 

1 of Jefferson County. Washington Dep’t 

of Ecology, 511 U.S. 700, 705 (1994). 

Sections 301, 304, and 306 of the 

Clean Water Act require that EPA 

develop technology-based effluent 

limitations guidelines and new source 

performance standards that are used as 

the basis for technology-based minimum 

discharge requirements in wastewater 

discharge permits. EPA issues these 

effluent limitations guidelines and 

standards for categories of industrial 

dischargers based on the pollutants of 

concern discharged by the industry, the 

degree of control that can be attained 

using various levels of pollution control 

technology, consideration of economics, 

as appropriate to each level of control, 

and other factors identified in sections 

304 and 306 of the Clean Water Act 

(such as non-water quality 

environmental impacts including energy 

impacts). EPA has promulgated 

regulations setting effluent limitations 

guidelines and standards under sections 

301, 304, and 306 of the Clean Water 

Act for more than 50 industries. See 40 

CFR 405 through 471. EPA has 

established effluent limitations 

guidelines and standards that apply to 

most of the industry categories that use 

cooling water intake structures (e.g., 

steam electric power generation, iron 

and steel manufacturing, pulp and 

paper manufacturing, petroleum 

refining, and chemical manufacturing). 

Section 316(b) states, in full:

Any standard established pursuant to 

section 301 or section 306 of [the Clean 

Water] Act and applicable to a point source 

shall require that the location, design, 

construction, and capacity of cooling water 

intake structures reflect the best technology 

available for minimizing adverse 

environmental impact.

The phrase ‘‘best technology 

available’’ in Clean Water Act section 

316(b) is not defined in the statute, but 

its meaning can be understood in light 

of similar phrases used elsewhere in the 

Clean Water Act. See Riverkeeper v. 

EPA, slip op. at 11 (2nd Cir. Feb. 3, 

2004) (noting that the cross-reference in 

Clean Water Act section 316(b) to Clean 

Water Act section 306 ‘‘is an invitation 

to look at section 306 for guidance in 

determining what factors Congress 

intended the EPA to consider in 

determining ‘best technology available’

for new sources.’’).

In sections 301 and 306, Congress 

directed EPA to set effluent discharge 

standards for new sources based on the 

‘‘best available demonstrated control 

technology’’ and for existing sources 

based on the ‘‘best available technology 

economically achievable.’’ For new 

sources, section 306(b)(1)(B) directs EPA 

to establish ‘‘standards of performance.’’

The phrase ‘‘standards of performance’’

under section 306(a)(1) is defined as 

being the effluent reduction that is 

‘‘achievable through application of the 

best available demonstrated control 

technology, processes, operating 

methods or other alternatives. * * *’’

This is commonly referred to as ‘‘best 

available demonstrated technology’’ or 

‘‘BADT.’’ For existing dischargers, 

section 301(b)(1)(A) requires the 

establishment of effluent limitations 

based on ‘‘the application of best 

practicable control technology currently 

available.’’ This is commonly referred to 

as ‘‘best practicable technology’’ or 

‘‘BPT.’’ Further, section 301(b)(2)(A) 

directs EPA to establish effluent 

limitations for certain classes of 

pollutants ‘‘which shall require the 

application of the best available 

technology economically achievable.’’

This is commonly referred to as ‘‘best 

available technology’’ or ‘‘BAT.’’

Section 301 specifies that both BPT and 

BAT limitations must reflect 

determinations made by EPA under 

Clean Water Act section 304. Under 

these provisions, the limitations on the 

discharge of pollutants from point 

sources are based upon the capabilities 

of the equipment or ‘‘control 

technologies’’ available to control those 

discharges. 

The phrases ‘‘best available 

demonstrated technology’’ and ‘‘best 

available technology’’—like ‘‘best 

technology available’’ in Clean Water 

Act section 316(b)—are not defined in 

the statute. However, section 304 of the 

Clean Water Act specifies factors to be 

considered in establishing the best 

practicable control technology currently 

available and best available technology. 

For best practicable control 

technology currently available, the 

Clean Water Act directs EPA to 

consider:

the total cost of application of technology in 

relation to the effluent reduction benefits to 

be achieved from such application, and shall 

also take into account the age of the 

equipment and facilities involved, the 

process employed, the engineering aspects of 

the application of various types of control 

techniques, process changes, non-water 

quality environmental impact (including 

energy requirements), and such other factors 

as [EPA] deems appropriate.

33 U.S.C. 1314(b)(1)(b). 

For ‘‘best available technology,’’ the 

Clean Water Act directs EPA to 

consider:

the age of equipment and facilities involved, 

the process employed, the engineering 

aspects * * * of various types of control 

techniques, process changes, the cost of 

achieving such effluent reduction, non-water 

quality environmental impacts (including 

energy requirements), and such other factors 

as [EPA] deems appropriate.

33 U.S.C. 1314(b)(2)(B). 

Section 316(b) expressly refers to 

section 301, and the phrase ‘‘best 

technology available’’ is very similar to 

‘‘best available technology’’ in that 

section. These facts, coupled with the 

brevity of section 316(b) itself, 

prompted EPA to look to section 301 

and, ultimately, section 304 for 

guidance in determining the ‘‘best 

technology available to minimize 

adverse environmental impact’’ of 

cooling water intake structures for 

existing Phase II facilities. 

By the same token, however, there are 

significant differences between section 

316(b) and sections 301 and 304. See 

Riverkeeper, Inc. v. United States 

Environmental Protection Agency, slip 

op. at 13 (2nd Cir. Feb. 3, 2004) (‘‘not 

every statutory directive contained [in 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68449

sections 301 and 306] is applicable’’ to 

a section 316(b) rulemaking). Section 

316(b) requires that cooling water intake 

structures reflect the best technology 

available for minimizing adverse 

environmental impact. In contrast to the 

effluent limitations provisions, the 

object of the ‘‘best technology available’’

is explicitly articulated by reference to 

the receiving water: To minimize 

adverse environmental impact in the 

waters from which cooling water is 

withdrawn. This difference is reflected 

in EPA’s past practices in implementing 

sections 301, 304, and 316(b). While 

EPA has established effluent limitations 

guidelines based on the efficacy of one 

or more technologies to reduce 

pollutants in wastewater, considering 

costs, but without necessarily 

considering the impact on the receiving 

waters, EPA has previously considered 

the costs of technologies in relation to 

the benefits of minimizing adverse 

environmental impact in establishing 

section 316(b) limits. In Re Public 

Service Co. of New Hampshire, 10 ERC 

1257 (June 17, 1977); In Re Public 

Service Co. of New Hampshire, 1 EAD 

455 (Aug. 4, 1978); Seacoast AntiPollution League v. Costle, 597 F. 2d 

306 (1st Cir. 1979). 

For this Phase III rulemaking, EPA 

therefore interprets Clean Water Act 

section 316(b) as authorizing EPA to 

consider not only technologies but also 

their effects on and benefits to the water 

from which the cooling water is 

withdrawn. Based on these two 

considerations, today’s proposed rule 

establishes national requirements for 

facilities to install technology, as 

appropriate, that is technically 

available, economically practicable, 

cost-effective, and justified by the 

benefits to the source waterbody.

At this time, EPA is co-proposing all 

three options discussed above because it 

sees advantages to each. EPA is also 

considering an alternative under which 

EPA would not promulgate, at this time, 

categorical requirements under section 

316(b) for cooling water intake 

structures unregulated by Phase I and 

Phase II. Rather, EPA would continue to 

rely on the best professional judgment 

of the permitting authority to determine 

the best technology available to 

minimize adverse environmental 

impact, in order to allow these 

requirements to be better tailored to 

local conditions. 

2. Consent Decree 

Publication of this proposal fulfills 

one of EPA’s obligations to comply with 

a consent decree, as amended. The 

Second Amended Consent Decree, 

which is relevant to today’s proposed 

rule, was filed on November 25, 2002, 

in the United States District Court, 

Southern District of New York, in 

Riverkeeper, Inc. v. Leavitt, No. 93 Civ 

0314 (AGS). That case was brought 

against EPA by a coalition of 

individuals and environmental groups. 

The original Consent Decree, filed on 

October 10, 1995, provided that EPA 

was to propose regulations 

implementing section 316(b) by July 2, 

1999, and take final action with respect 

to those regulations by August 13, 2001. 

Under subsequent interim orders, the 

Amended Consent Decree filed on 

November 22, 2000, and the Second 

Amended Consent Decree, EPA divided 

the rulemaking into three phases. EPA 

took final action on a rule governing 

cooling water intake structures used by 

new facilities (Phase I) on November 9, 

2001 (66 FR 65255, December 18, 2001). 

EPA took final action on a rule 

governing cooling water intake 

structures used by large existing power 

producers (Phase II) on February 16, 

2004 (69 FR 41576, July 9, 2004). The 

consent decree further requires that EPA 

propose regulations applicable to, at a 

minimum, existing facilities using 

cooling water intake structures with 

intake flows above a minimum 

threshold to be determined by EPA, in 

the following categories: power 

producers not covered by the Phase II 

regulations, pulp and paper 

manufacturing, petroleum and coal 

products manufacturing, chemical and 

allied products manufacturing, and 

primary metal manufacturing (Phase III). 

EPA is required to propose regulations 

for Phase III facilities by November 1, 

2004, and take final action by June 1, 

2006. 

3. What Other EPA Rulemakings and 

Guidance Address Cooling Water Intake 

Structures? 

In April 1976, EPA published a final 

rule under section 316(b) that addressed 

cooling water intake structures. 41 FR 

17387 (April 26, 1976), see also the 

proposed rule at 38 FR 34410 (December 

13, 1973). The rule added a new 

§ 401.14 to 40 CFR Chapter I that 

reiterated the requirements of Clean 

Water Act section 316(b). It also added 

a new part 402, which included three 

sections: (1) Section 402.10 

(Applicability), (2) § 402.11 (Specialized 

definitions), and (3) § 402.12 (Best 

technology available for cooling water 

intake structures). Section 402.10 stated 

that the provisions of part 402 applied 

to ‘‘cooling water intake structures for 

point sources for which effluent 

limitations are established pursuant to 

section 301 or standards of performance 

are established pursuant to section 306 

of the Act.’’ Section 402.11 defined the 

terms ‘‘cooling water intake structure,’’

‘‘location,’’ ‘‘design,’’ ‘‘construction,’’

‘‘capacity,’’ and ‘‘Development 

Document.’’ Section 402.12 included 

the following language:

The information contained in the 

Development Document shall be considered 

in determining whether the location, design, 

construction, and capacity of a cooling water 

intake structure of a point source subject to 

standards established under section 301 or 

306 reflect the best technology available for 

minimizing adverse environmental impact.

In 1977, fifty-eight electric utility 

companies challenged those regulations, 

arguing that EPA had failed to comply 

with the requirements of the 

Administrative Procedure Act (APA) in 

promulgating the rule. Specifically, the 

utilities argued that EPA had neither 

published the Development Document 

in the Federal Register nor properly 

incorporated the document into the rule 

by reference. The United States Court of 

Appeals for the Fourth Circuit agreed 

and, without reaching the merits of the 

regulations themselves, remanded the 

rule. Appalachian Power Co. v. Train,

566 F.2d 451 (4th Cir. 1977). EPA later 

withdrew part 402. 44 FR 32956 (June 

7, 1979). The regulation at 40 CFR 

401.14, which reiterates the statutory 

requirement, remains in effect. 

Since the Fourth Circuit remanded 

EPA’s section 316(b) regulations in 

1977, NPDES permit authorities have 

made decisions implementing section 

316(b) on a case-by-case, site-specific 

basis. EPA published draft guidance 

addressing section 316(b) 

implementation in 1977. See Draft 

Guidance for Evaluating the Adverse 

Impact of Cooling Water Intake 

Structures on the Aquatic Environment: 

Section 316(b) Pub. L. 92–500 (U.S. 

EPA, 1977). This draft guidance 

described the studies recommended for 

evaluating the impact of cooling water 

intake structures on the aquatic 

environment and recommended a basis 

for determining the best technology 

available for minimizing adverse 

environmental impact. The 1977 section 

316(b) draft guidance states, ‘‘The 

environmental-intake interactions in 

question are highly site-specific and the 

decision as to best technology available 

for intake design, location, construction, 

and capacity must be made on a caseby-case basis.’’ (Section 316(b) Draft 

Guidance, U.S. EPA, 1977, p. 4). This 

case-by-case approach was also 

consistent with the approach described 

in the 1976 Development Document 

referenced in the remanded regulation. 

The 1977 section 316(b) draft 

guidance suggested a general process for 

developing information needed to 

68450 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

support section 316(b) decisions and 

presenting that information to the 

permitting authority. The process 

involved the development of a sitespecific study of the environmental 

effects associated with each facility that 

uses one or more cooling water intake 

structures, as well as consideration of 

that study by the permitting authority in 

determining whether the facility must 

make any changes for minimizing 

adverse environmental impact. Where 

adverse environmental impact is 

present, the 1977 draft guidance 

suggested a stepwise approach that 

considers screening systems, size, 

location, capacity, and other factors. 

Although the draft guidance described 

the information that should be 

developed, key factors that should be 

considered, and a process for supporting 

section 316(b) determinations, it did not 

establish uniform technology-based 

national standards for best technology 

available for minimizing adverse 

environmental impact. Rather, the 

guidance left the decisions on the 

appropriate location, design, capacity, 

and construction of cooling water intake 

structures to the permitting authority. 

Under this framework, the Director 

determined whether appropriate studies 

have been performed, whether a given 

facility has minimized adverse 

environmental impact, and what, if any, 

technologies may be required.

4. Phase I New Facility Rule 

On November 9, 2001, EPA took final 

action on regulations governing cooling 

water intake structures at new facilities. 

66 FR 65255 (December 18, 2001). On 

December 26, 2002, EPA made minor 

changes to the Phase I regulations. 67 

FR 78947. The final Phase I new facility 

rule (40 CFR 125, Subpart I) establishes 

requirements applicable to the location, 

design, construction, and capacity of 

cooling water intake structures at new 

facilities that withdraw greater than two 

(2) million gallons per day (MGD) and 

use at least twenty-five (25) percent of 

the water they withdraw solely for 

cooling purposes. In the new facility 

rule, EPA adopted a two-track approach. 

Under Track I, for facilities with a 

design intake flow more than 10 MGD, 

the intake flow of the cooling water 

intake structure is restricted, at a 

minimum, to a level commensurate with 

that which could be attained by use of 

a closed-cycle, recirculating cooling 

system. For facilities with a design 

intake flow greater than 2 MGD, the 

design through-screen intake velocity is 

restricted to 0.5 feet per second and the 

total quantity of intake is restricted to a 

proportion of the mean annual flow of 

a freshwater river or stream, or to 

maintain the natural thermal 

stratification or turnover patterns 

(where present) of a lake or reservoir 

except in cases where the disruption is 

beneficial, or to a percentage of the tidal 

excursions of a tidal river or estuary. If 

certain environmental conditions exist, 

an applicant with intake capacity 

greater than 10 MGD must select and 

implement appropriate design and 

construction technologies for 

minimizing impingement mortality and 

entrainment. (Applicants with 2 to 10 

MGD flows are not required to reduce 

intake flow to a level commensurate 

with a closed-cycle, recirculating 

cooling system, but must install 

technologies for reducing entrainment at 

all locations.) Under Track II, the 

applicant has the opportunity to 

demonstrate to the Director that the 

technologies he employs will reduce the 

level of adverse environmental impact 

to a comparable level to what would be 

achieved by meeting the Track I 

requirements for restricting intake flow 

and velocity. As part of this 

demonstration, EPA initially had 

allowed the applicant to employ control 

measures other than reducing 

impingement mortality and 

entrainment, including restoration 

measures that would result in increases 

in fish and shellfish, comparable to the 

reduction in impingement mortality and 

entrainment it would achieve were it to 

implement the Track I intake flow and 

velocity requirements. However, in 

February 2004, the 2nd Circuit Court of 

Appeals issued a decision in response to 

several petitions challenging the final 

Phase I rule. The Court found that EPA 

exceeded its authority by allowing new 

facilities to comply with section 316(b) 

through restoration methods, and 

remanded that aspect of the rule to EPA. 

Riverkeeper, Inc. v. EPA, 358 F.3d 174, 

191 (2nd Cir., 2004). 

Directors may establish less stringent 

alternative requirements for a facility if 

compliance with the Phase I standards 

would result in compliance costs 

wholly out of proportion to those EPA 

considered in establishing the 

requirements at issue or would result in 

significant adverse impacts on local air 

quality, water resources, or local energy 

markets. 

With the new facility rule, EPA 

promulgated national minimum 

requirements for the location, design, 

capacity, and construction of cooling 

water intake structures at new facilities. 

The final new facility rule establishes a 

reasonable framework that creates 

certainty for permitting of new facilities, 

while providing significant flexibility to 

take site-specific factors into account. 

EPA specifically excluded new 

offshore oil and gas extraction facilities 

from the Phase I new facility rule, but 

committed to consider establishing 

requirements for such facilities in the 

Phase III rulemaking. 66 FR 65338 

(December 18, 2001). 

5. Phase II Existing Facility Rule 

On February 16, 2004, EPA took final 

action on regulations governing cooling 

water intake structures at certain 

existing power producing facilities. 69 

FR 41576 (July 9, 2004). The final Phase 

II rule applies to existing facilities that 

are point sources; that, as their primary 

activity, both generate and transmit 

electric power or generate electric 

power for sale or transmission; that use 

or propose to use a cooling water intake 

structure with a total design intake flow 

of 50 MGD or more to withdraw water 

from waters of the United States; and 

that use at least 25 percent of the 

withdrawn water exclusively for cooling 

purposes. 

Under the Phase II rule, EPA 

established performance standards for 

the reduction of impingement mortality 

and, when appropriate, entrainment (see

40 CFR 125.94). The performance 

standards consist of ranges of reductions 

in impingement mortality and/or 

entrainment (e.g., reduce impingement 

mortality by 80 to 95 percent and/or 

entrainment by 60 to 90 percent). These 

performance standards reflect the best 

technology available for minimizing 

adverse environmental impacts. The 

type of performance standard applicable 

to a particular facility (i.e., reductions in 

impingement mortality only or 

impingement mortality and 

entrainment) is based on several factors, 

including the facility’s location (i.e., 

source waterbody), rate of use (capacity 

utilization rate), and the proportion of 

the waterbody withdrawn. In most 

cases, EPA believes that these 

performance standards can be met using 

design and construction technologies or 

operational measures. The performance 

standards also can be met, in whole or 

in part, by using restoration measures, 

following consideration of design and 

construction technologies or operational 

measures, and provided such measures 

meet certain specified requirements. 

(See 40 CFR 125.94(c)). 

The Phase II rule identifies five 

alternatives to achieve compliance with 

the requirements for best technology 

available for minimizing adverse 

environmental impacts associated with 

cooling water intake structures. A 

facility must demonstrate to the Director 

one of the following: (1) That it has 

already reduced its flow commensurate 

with a closed-cycle recirculating system 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68451

(to meet performance standards for 

impingement and entrainment), or that 

it has already reduced its design intake 

velocity to 0.5 feet per second or less (to 

meet the impingement performance 

standard only); (2) that its current 

cooling water intake structure 

configuration meets the applicable 

performance standards; (3) that it has 

selected design and construction 

technologies, operational measures, 

and/or restoration measures that, in 

combination with any existing design 

and construction technologies, 

operational measures, and/or restoration 

measures, meet the applicable 

performance standards; (4) that it meets 

the applicability criteria and has 

installed and is properly operating and 

maintaining a rule-specified and/or 

State-specified approved design and 

construction technology (i.e., submerged 

cylindrical wedgewire screen) in 

accordance with 40 CFR 125.99(a) or an 

alternative technology that meets the 

appropriate performance standards and 

is approved by the Director in 

accordance with 40 CFR 125.99(b); or 

(5) that its costs of compliance would be 

significantly greater than the costs 

considered by the Administrator for a 

like facility to meet the applicable 

performance standards, or than the 

benefits of meeting the applicable 

performance standards at the facility. A 

discussion of the legal authority and 

basis for the use of the cost test is found 

in section VI of this preamble. 

During the first permit term and 

subsequent permit terms, a facility that 

chooses compliance alternatives two (2) 

through five (5), as described above, 

may request that compliance with the 

requirements of the rule be determined 

based on the implementation of a 

Technology Installation and Operation 

Plan (TIOP), indicating how the facility 

will install and ensure the efficacy, to 

the extent practicable, of design and 

construction technologies and/or 

operational measures, and/or a 

Restoration Plan. Adaptive management 

practices must be employed to ensure 

compliance during subsequent permit 

terms. The TIOP must be developed and 

submitted to the Director in accordance 

with 40 CFR 125.95(b)(4)(ii). The 

Restoration Plan must be developed in 

accordance with 40 CFR 125.95(b)(5).

6. Public Participation 

EPA worked extensively with 

stakeholders from the industry, public 

interest groups, State agencies, and 

other Federal agencies in the 

development of this proposed rule. EPA 

included industry groups, 

environmental groups, and other 

government entities in the development, 

testing, refinement, and completion of 

the section 316(b) survey, which was 

used as a primary source of data for the 

Phase III proposed rule. As discussed in 

section III of today’s preamble, the 

survey, ‘‘Information Collection 

Request, Detailed Industry 

Questionnaires: Phase II Cooling Water 

Intake Structures & Watershed Case 

Study Short Questionnaire,’’ was 

initiated in 1997, and was used to 

collect data during 1998. EPA 

conducted two public meetings on 

section 316(b) issues. In June of 1998, 

EPA conducted a public meeting 

focused on a draft regulatory framework 

for assessing potential adverse 

environmental impact from 

impingement mortality and 

entrainment. 63 FR 27958 (May 21, 

1998). A second public meeting was 

held in September of 1998, and focused 

on technology, cost, and mitigation 

issues. 63 FR 40683 (July 30, 1998). In 

addition, in September of 1998, and 

April of 1999, EPA participated in 

technical workshops sponsored by the 

Electric Power Research Institute on 

issues relating to the definition and 

assessment of adverse environmental 

impact. EPA also participated in other 

industry conferences, and has met with 

representatives of industry and 

environmental groups. 

In the months leading up to 

publication of the proposed Phase I rule, 

EPA conducted a series of stakeholder 

meetings to review the draft regulatory 

framework for the proposed rule and 

invited stakeholders to provide their 

recommendations. Participants included 

representatives of the electric power 

industry, as well as the petroleum 

refining, pulp and paper, and iron and 

steel industries. EPA also met with 

environmental groups, States, and 

interstate groups. After publication of 

the proposed Phase I rule, EPA 

continued to meet with stakeholders. 

Summaries of these meetings are in the 

docket. EPA also received many 

comments on the Phase I proposed rule 

(65 FR 49059, August 10, 2000) and 

Notice of Data Availability (NODA). (66 

FR 28853, May 25, 2001). These 

comments informed the development of 

the Phase II rule and this Phase III 

proposed rule. 

In January 2001, EPA attended 

technical workshops organized by the 

Electric Power Research Institute and 

the Utilities Water Act Group. These 

workshops focused on key issues 

associated with different regulatory 

approaches considered under the Phase 

I proposed rule and alternatives for 

addressing section 316(b) requirements. 

On May 23, 2001, EPA held a daylong forum to discuss specific issues 

associated with the development of 

regulations under section 316(b) of the 

Clean Water Act. 66 FR 20658 (April 24, 

2001). At the meeting, 17 experts from 

industry, public interest groups, States, 

and academia reviewed and discussed 

the Agency’s preliminary data on 

cooling water intake structure 

technologies that are in place at existing 

facilities and the costs associated with 

the use of available technologies for 

reducing impingement mortality and 

entrainment. Over 120 people attended 

the meeting. 

On August 21, 2001, EPA participated 

in a technical symposium sponsored by 

the Electric Power Research Institute in 

association with the American Fisheries 

Society on issues relating to the 

definition and assessment of adverse 

environmental impact under section 

316(b) of the Clean Water Act. 

During development of the Phase I 

and Phase II rules, EPA coordinated 

with the Nuclear Regulatory 

Commission (NRC) to ensure that there 

would not be a conflict with NRC safety 

requirements. NRC reviewed the 

proposed Phase II rule and did not 

identify any apparent conflict with 

nuclear plant safety. NRC licensees 

would continue to be obligated to meet 

NRC requirements for design and 

reliable operation of cooling systems. 

NRC recommended that EPA consider 

adding language which states that in 

cases of conflict between an EPA 

requirement and an NRC safety 

requirement, the NRC safety 

requirement takes precedence. EPA 

added language to address this concern 

in the Phase II final rule and this 

proposed rule. 

EPA sponsored a Symposium on 

Cooling Water Intake Technologies to 

Protect Aquatic Organisms, on May 6–

7, 2003. This symposium brought 

together professionals from Federal, 

State, and Tribal regulatory agencies; 

industry; environmental organizations; 

engineering consulting firms; science 

and research organizations; academia; 

and others concerned with mitigating 

harm to the aquatic environment by 

cooling water intake structures. Efficacy 

and costs of various technologies to 

mitigate impacts to aquatic organisms 

from cooling water intake structures, as 

well as research and other future needs, 

were discussed. 

During the development of this 

proposed regulation, EPA met several 

times with trade associations whose 

members would be subject to the Phase 

III requirements. EPA also conducted 

Phase III-specific data collection 

activities, including a study of 

entrainment at manufacturing facilities, 

contacting Phase III facilities to request 

68452 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

biological studies and conducted an 

industry survey of offshore oil and gas 

extraction facilities and seafood 

processing vessels. 

Finally, EPA convened a Small 

Business Advocacy Review (SBAR) 

panel (in accordance with the 

Regulatory Flexibility Act section 609(b) 

as amended by the Small Business 

Regulatory and Enforcement Fairness 

Act) to provide information to small 

entities and receive feedback during the 

Phase III rulemaking process. EPA 

hosted a pre-panel outreach meeting for 

small entities potentially subject to 

Phase III on January 22, 2004. The SBAR 

panel held an outreach meeting with 

small entity representatives (SERs) on 

March 16, 2004. Based on the 

information gathered from the 

participating small entities during these 

outreach meetings and subsequent 

correspondence, the SBAR panel 

produced a final report to the EPA 

Administrator on April 27, 2004. 

Results of the final report were 

considered in the development of this 

proposed Phase III rule. 

These coordination efforts and all of 

the meetings described in this section, 

as well as the comments submitted on 

the Phase I and II section 316(b) rules 

and EPA’s response to these comments, 

are documented or summarized in the 

dockets for these three rules. The 

Administrative Record for today’s 

proposal includes all materials from the 

Phase I, Phase II, and Phase III section 

316(b) rule dockets.

II. Scope and Applicability of the 

Proposed Rule 

Based on the co-proposed flow 

thresholds based options in today’s 

proposed rule, the proposed national 

categorical requirements would apply to 

two groups of facilities: (1) Existing 

manufacturing facilities (including but 

not limited to chemical, metal, pulp and 

paper, and petroleum refining facilities), 

and (2) new offshore oil and gas 

extraction facilities. In today’s proposed 

rule, the term ‘‘new offshore oil and gas 

extraction facility’’ is defined to include 

facilities in both the offshore and the 

coastal subcategories of EPA’s Oil and 

Gas Extraction Point Source Category for 

which effluent limitations are 

established at 40 CFR part 435. 

Although the term ‘‘offshore’’ denotes 

only one of these two subcategories for 

purposes of the effluent guidelines, EPA 

decided that it was more efficient to use 

the term ‘‘offshore’’ to denote facilities 

in either subcategory for purposes of 

today’s rule because the proposed 

requirements are the same for both 

offshore and coastal facilities and the 

term ‘‘offshore’’ is commonly 

understood to include any facilities not 

located on land. EPA requests comment 

on whether this definition is likely to 

cause confusion over the scope of 

covered facilities. In order to be covered 

by today’s proposed rule, these facilities 

would need to use cooling water intake 

structures to withdraw water from 

waters of the U.S. and meet all other 

applicability criteria, described below. 

Existing facilities that meet all of the 

following criteria would be subject to 

today’s proposed rule, if promulgated as 

proposed (see § 125.101). 

• The facility is a point source that 

has or is required to have an NPDES 

permit under section 402 of the Clean 

Water Act; 

• The facility is an existing facility 

not subject to the Phase II regulation; 

• The facility uses at least 25 percent 

of water withdrawn exclusively for 

cooling purposes, measured on an 

average annual basis; and 

• The facility uses, or proposes to 

use, cooling water intake structures, 

including a cooling water intake 

structure operated by an independent 

supplier (other than a public water 

system), with a total design intake flow 

equal to or greater than a certain 

threshold to withdraw cooling water 

from waters of the United States. 

Today’s proposed rule co-proposes 

three options based on design intake 

flow and source waterbody type for 

defining which existing facilities are 

Phase III existing facilities subject to 

categorical national requirements: 

• The facility has a total design intake 

flow of 50 MGD or more, and withdraws 

from any waterbody type (‘‘50 MGD All 

Waterbodies’’); 

• The facility has a total design intake 

flow of 200 MGD or more, and 

withdraws from any waterbody type 

(‘‘200 MGD All Waterbodies’’); 

• The facility has a total design intake 

flow of 100 MGD or more and 

withdraws water from an ocean, estuary, 

tidal river, or one of the Great Lakes 

(‘‘100 MGD Certain Waterbodies’’). 

A facility meeting the above criteria, 

including any flow threshold EPA 

adopts after considering comments on 

the three co-proposed options, would be 

referred to as a ‘‘Phase III existing 

facility.’’ If an existing facility does not 

meet the relevant Phase II or Phase III 

cooling water use and intake flow 

thresholds by itself, and is co-located 

with an existing facility that is not 

subject to the Phase II regulation (e.g.,

a power producing facility below the 

Phase II flow threshold, or a 

manufacturing facility), both facilities 

would still be subject to Phase III 

requirements if the cooling water used 

collectively by the co-located facilities 

meets the applicable thresholds (and the 

facilities meet the other requisite Phase 

III criteria). Co-located facilities adjoin 

each other and are under common 

ownership, operation, or management. If 

a facility is a point source that uses a 

cooling water intake structure and has, 

or is required to have, an NPDES permit, 

but does not meet the proposed 

applicable design intake flow/source 

waterbody threshold or the 25 percent 

cooling water use threshold, it would 

continue to be subject to permit 

conditions implementing CWA section 

316(b) set by the permit director on a 

case-by-case, best professional judgment 

basis. 

Today’s notice also proposes 

requirements for new offshore oil and 

gas extraction facilities, which were 

specifically excluded from the Phase I 

new facility rule. (40 CFR 125 Subpart 

I). Section II.B of the preamble discusses 

what constitutes a ‘‘new’’ offshore oil 

and gas extraction facility for purposes 

of the section 316(b) proposed Phase III 

rule. Requirements for new offshore oil 

and gas extraction facilities are 

proposed in 40 CFR Subpart N. EPA is 

seeking comment on the requirements 

contained in this subpart. EPA is not 

seeking comment on the Phase I rule 

that EPA promulgated in 2001. 

Finally, under today’s proposed rule a 

seafood processing vessel or an offshore 

liquefied natural gas import terminal 

would not be subject to national 

categorical requirements. Such a facility 

could be subject to permit conditions 

implementing CWA section 316(b) set 

by the permit director on a case-by-case, 

best professional judgment basis where 

the facility is a point source that uses a 

cooling water intake structure and has, 

or is required to have, an NPDES permit.

A. What Is a ‘‘New’’ Offshore Oil and 

Gas Extraction Facility for Purposes of 

the Section 316(b) Proposed Phase III 

Rule? 

For purposes of this proposed rule, 

new offshore oil and gas extraction 

facilities are those facilities that are 

subject to the Oil and Gas Extraction 

Point Source Category Effluent 

Guidelines (i.e., 40 CFR 435.10 Offshore 

Subcategory or 40 CFR 435.40 Coastal 

Subcategory); that commence 

construction more than 60 days after 

publication of the final rule; and that 

meet all other aspects of the ‘‘new 

facility’’ definition in § 125.83 (other 

than the date for commencing 

construction). In other words, in order 

to be covered by today’s proposed rule, 

a new offshore oil and gas extraction 

facility would have to be a new source 

or new discharger per 40 CFR 122.2 and 

122.29, a greenfield or stand-alone 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68453

1Construction is commenced if the owner or 

operator has undertaken certain installation and site 

preparation activities that are part of a continuous 

on-site construction program, and it includes 

entering into certain specified binding contractual 

obligations as one criterion (40 CFR 122.29(b)(4)).

2The Phase I rule also listed examples of facilities 

that would be ‘‘new’’ facilities and facilities that 

would ‘‘not be considered a ‘new facility’ ’’ in two 

numbered paragraphs. These read as follows: 

‘‘(1) Examples of ‘new facilities’ include, but are 

not limited to: the following scenarios: 

‘‘(i) A new facility is constructed on a site that 

has never been used for industrial or commercial 

activity. It has a new cooling water intake structure 

for its own use. 

‘‘(ii) A facility is demolished and another facility 

is constructed in its place. The newly-constructed 

facility uses the original facility’s cooling water 

intake structure, but modifies it to increase the 

design capacity to accommodate the intake of 

additional cooling water. 

‘‘(iii) A facility is constructed on the same 

property as an existing facility, but is a separate and 

independent industrial operation. The cooling 

water intake structure used by the original facility 

is modified by constructing a new intake bay for the 

use of the newly constructed facility or is otherwise 

modified to increase the intake capacity for the new 

facility. 

‘‘(2) Examples of facilities that would not be 

considered a ‘new facility’ include, but are not 

limited to, the following scenarios: 

‘‘(i) A facility in commercial or industrial 

operation is modified and either continues to use 

its original cooling water intake structure or uses a 

new or modified cooling water intake structure. 

‘‘(ii) A facility has an existing intake structure. 

Another facility (a separate and independent 

industrial operation), is constructed on the same 

property and connects to the facility’s cooling water 

intake structure behind the intake pumps, and the 

design capacity of the cooling water intake structure 

has not been increased. This facility would not be 

considered a ‘new facility’ even if routine 

maintenance or repairs that do not increase the 

design capacity were performed on the intake 

structure.’’

facility, and use either a newly 

constructed cooling water intake 

structure, or an existing cooling water 

intake structure whose design capacity 

is increased to accommodate the intake 

of additional cooling water. 

B. What Is an ‘‘Existing Facility’’ for 

Purposes of the Section 316(b) Proposed 

Phase III Rule? 

In today’s proposed rule, the 

definition of ‘‘existing facility’’ is the 

same as in the Phase II rule except for 

additional language addressing new 

offshore oil and gas extraction facilities: 

any facility that commenced 

construction on or before January 17, 

2002 (or 60 days after publication of the 

final rule for an offshore oil and gas 

extraction facility), as described in 40 

CFR 122.29(b)(4).1 January 17, 2002 is 

the effective date of the Phase I new 

facility rule and, therefore, the date for 

distinguishing new facilities from 

existing ones. However, offshore oil and 

gas extraction facilities were not subject 

to the Phase I new facility rule, but 

rather, would be subject to requirements 

under this proposed Phase III rule. 

Therefore, the effective date of the final 

Phase III rule would be the date for 

distinguishing new offshore oil and gas 

extraction facilities from existing ones. 

An ‘‘existing facility’’ under this 

proposed rule would include 

modifications and additions to existing 

facilities, that do not meet the definition 

of a new facility under the Phase I rule 

(40 CFR 125.83). That definition states:

New facility means any building, structure, 

facility, or installation that meets the 

definition of a ‘‘new source’’ or ‘‘new 

discharger’’ in [other NPDES regulations] and 

is a greenfield or stand-alone facility; 

commences construction after January 17, 

2002; and uses either a newly constructed 

cooling water intake structure, or an existing 

cooling water intake structure whose design 

capacity is increased to accommodate the 

intake of additional cooling water. New 

facilities include only ‘‘greenfield’’ and 

‘‘stand-alone’’ facilities. A greenfield facility 

is a facility that is constructed at a site at 

which no other source is located or that 

totally replaces the process or production 

equipment at an existing facility (see 40 CFR 

122.29(b)(1)(i) and (ii)). A stand-alone facility 

is a new, separate facility that is constructed 

on property where an existing facility is 

located and whose processes are 

substantially independent of the existing 

facility at the same site (see 40 CFR 

122.29(b)(1)(iii). New facility does not 

include new units that are added to a facility 

for purposes of the same general industrial 

operation (for example, a new peaking unit 

at an electrical generating station).2

The definition in today’s proposed 

regulation is intended to be consistent 

with EPA’s definition of new facility in 

the Phase I rule (§ 125.83) and to ensure 

that sources excluded from the 

definition of new facility in the Phase I 

rule are captured by the definition of 

existing facility.

The determination of whether a 

facility is ‘‘new’’ or ‘‘existing’’ is 

focused on the point source 

discharger—not on the cooling water 

intake structure. In other words, 

modifications or additions to the 

cooling water intake structure (or even 

the total replacement of an existing 

cooling water intake structure with a 

new one) does not convert an otherwise 

unchanged existing facility into a new 

facility, regardless of the purpose of 

such changes. Rather, the determination 

as to whether a facility is new or 

existing focuses on the point source 

itself, i.e., whether it is a greenfield 

facility or a stand-alone facility. 

Under this proposed rule, an existing 

manufacturing facility that replaces or 

modifies an existing generating or 

manufacturing unit would remain 

subject to regulation as a Phase III 

existing facility, unless (1) the existing 

facility were completely demolished 

and another facility constructed in its 

place (a ‘‘greenfield’’ facility), or a 

separate facility with substantially 

independent processes were constructed 

on the property (a ‘‘stand-alone’’

facility) and (2) the new facility used 

either a new intake structure or the 

existing structure with an increased 

design capacity. To illustrate, an 

existing facility that undertook the 

following facility modifications or 

additions would continue to be 

characterized as an existing facility—not 

a new facility—under today’s proposed 

rule: 

• An existing manufacturing facility 

undergoes a modification of its process 

short of total replacement of the process 

and concurrently increases the design 

capacity of its existing cooling water 

intake structures; 

• An existing manufacturing facility 

builds a new process at its site for 

purposes of the same industrial 

operation and concurrently increases 

the design capacity of its existing 

cooling water intake structures; 

• An existing manufacturing facility 

completely rebuilds its process but uses 

the existing cooling water intake 

structure with no increase in design 

capacity. 

Phase III existing facilities subject to 

today’s proposed rule would also 

include point sources that are new users 

of cooling water intake structures, but 

do not meet the definition of new 

facility under § 125.83. For example, an 

existing facility may have historically 

withdrawn its cooling water from a 

municipal or other source, but then 

begins to withdraw cooling water from 

a water of the United States. This 

facility would be considered an existing 

facility because it is not a ‘‘greenfield’’

or ‘‘stand alone’’ facility within the 

meaning of the new facility rule. 

Similarly, a facility that previously 

relied on unit processes that do not 

require cooling water, and then adds or 

modifies a unit process for purposes of 

the same industrial operation such that 

cooling water is subsequently required, 

would also be regulated as an existing 

facility, not a new facility, under 316(b). 

C. What Is ‘‘Cooling Water’’ and What 

Is a ‘‘Cooling Water Intake Structure?’

Today’s proposed rule would adopt 

for Phase III facilities the same 

definition of a ‘‘cooling water intake 

structure’’ that applies to new facilities 

under the final Phase I rule and existing 

facilities under the final Phase II rule. A 

cooling water intake structure would be 

defined as the total physical structure 

and any associated constructed 

waterways used to withdraw cooling 

68454 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

water from waters of the Unites States. 

Under this definition, the cooling water 

intake structure extends from the point 

at which water is withdrawn from the 

surface water source up to and 

including the intake pumps. Today’s 

proposed rule also would adopt the 

definition of ‘‘cooling water’’ used in 

the Phase I and Phase II rules: water 

used for contact or noncontact cooling, 

including water used for equipment 

cooling, evaporative cooling tower 

makeup, and dilution of effluent heat 

content. The definition specifies that the 

intended use of cooling water is to 

absorb waste heat rejected from the 

processes used or auxiliary operations 

on the facility’s premises. The definition 

also indicates that water used in a 

manufacturing process either before or 

after it is used for cooling is process 

water and would not be considered 

cooling water for purposes of 

determining whether the facility was 

using 25 percent or more of the water 

withdrawn for cooling purposes. This 

clarification is necessary because 

cooling water intake structures typically 

bring water into a facility for numerous 

purposes, including use in industrial 

processes; use as circulating water, 

service water, or evaporative cooling 

tower makeup water; dilution of effluent 

heat content; equipment cooling; and air 

conditioning. This is particularly true 

for manufacturers addressed under this 

proposed rule, who often seek to reduce 

water use and increase efficiency 

through water reuse. EPA does not wish 

to create a disincentive to such 

improved efficiency and recognizes that 

to do so could result in other forms of 

environmental impacts. Consequently, 

and consistent with the Phase I and 

Phase II rules, only the water used 

exclusively for cooling purposes would 

be counted when determining whether 

the 25 percent threshold in 

§ 125.101(a)(4) or § 125.131(a)(2) is met.

This proposed definition of ‘‘cooling 

water intake structure’’ differs from the 

definition provided in the 1977 Draft 

Guidance for Evaluating the Adverse 

Impact of Cooling Water Intake 

Structures on the Aquatic Environment: 

Section 316(b) Pub. L. 92–500 (U.S. 

EPA, 1977). The proposed rule 

definition would clarify that the cooling 

water intake structure includes the 

physical structure that extends from the 

point at which water is withdrawn from 

the surface water up to and including 

the intake pumps. Inclusion of the term 

‘‘associated constructed waterways’’ in 

today’s proposed rule is intended to 

clarify that the definition includes those 

canals, channels, connecting waterways, 

and similar structures that may be built 

or modified to facilitate the withdrawal 

of cooling water. The explicit inclusion 

of the intake pumps in the definition 

reflects the key role pumps play in 

determining the capacity (i.e., dynamic 

capacity) of the intake. These pumps, 

which bring in water, are an essential 

component of the cooling water intake 

structure since without them the intake 

structure could not work as designed. 

D. Would My Facility Be Covered if It 

Withdraws From Waters of the United 

States? 

The requirements proposed today 

would apply to cooling water intake 

structures that have the design capacity 

to withdraw amounts of water equal to 

or greater than the specified proposed 

intake flow thresholds from ‘‘waters of 

the United States.’’ Waters of the United 

States include the broad range of surface 

waters that meet the regulatory 

definition at 40 CFR 122.2, which 

includes lakes, ponds, reservoirs, 

nontidal rivers or streams, tidal rivers, 

estuaries, fjords, oceans, bays, and 

coves. These potential sources of 

cooling water may be adversely affected 

by impingement mortality and 

entrainment. 

Some facilities discharge heated water 

to cooling ponds, then withdraw water 

from the ponds for cooling purposes. 

EPA recognizes that cooling ponds may, 

in certain circumstances, constitute part 

of a closed-cycled cooling system. See, 

e.g., § 125.102. However, EPA does not 

intend that this proposed rule would 

change the regulatory status of cooling 

ponds. Cooling ponds are neither 

categorically included nor categorically 

excluded from the definition of ‘‘waters 

of the United States’’ at 40 CFR 122.2. 

EPA interprets 40 CFR 122.2 to give 

permit writers discretion to regulate 

cooling ponds as ‘‘waters of the United 

States’’ where cooling ponds meet the 

definition of ‘‘waters of the United 

States.’’ The determination of whether a 

particular cooling pond is a water of the 

United States is to be made by the 

permit writer on a case-by-case basis, 

informed by the discussions in Solid 

Waste Agency of Northern Cook County 

(SWANCC) v. U.S. Army Corps of 

Engineers, 531 U.S. 159 (2001), and 

subsequent case law. Therefore, 

facilities that withdraw cooling water 

from cooling ponds that are waters of 

the United States and that would meet 

today’s other proposed criteria for 

coverage (including the requirement 

that the facility has or will be required 

to obtain an NPDES permit) would be 

subject to today’s proposed rule. The 

EPA and the U.S. Army Corps of 

Engineers have jointly issued 

jurisdictional guidance concerning the 

term ‘‘waters of the United States’’ in 

light of the Supreme Court’s decision in 

Solid Waste Agency of Northern Cook 

County v. U.S. Army Corps of Engineers,

531 U.S. 159 (2001) (SWANCC). A copy 

of that guidance was published as an 

Appendix to an Advanced Notice of 

Proposed Rulemaking on the definition 

of the phrase ‘‘waters of the U.S.,’’ see 

68 FR 1991 (January 15, 2003), and may 

be obtained at http://www.epa.gov/

owow/wetlands/ANPRM–FR.pdf.

Proposed § 125.101(d) also provides, 

similar to the Phase I and Phase II rules, 

that facilities that obtain cooling water 

from a public water system or use 

treated effluent are not deemed to be 

using a cooling water intake structure 

for purposes of this proposed rule. 

E. Would My Facility Be Covered if It Is 

a Point Source Discharger? 

Today’s proposed rule would apply 

only to facilities that are point sources 

(i.e., have an NPDES permit or are 

required to obtain one) because they 

discharge or might discharge pollutants, 

including storm water, from a point 

source to waters of the United States. 

This is the same requirement EPA 

included in the Phase I and Phase II 

final rules (see, 40 CFR 125.81(a)(1), and 

40 CFR 125.91(a)(1), respectively). 

Requirements for complying with 

section 316(b) will continue to be 

applied through NPDES permits. 

Based on the Agency’s review of 

potential Phase III facilities that employ 

cooling water intake structures, the 

Agency anticipates that most Phase III 

facilities that would be subject to this 

proposed rule control the intake 

structure that supplies them with 

cooling water, and discharge some 

combination of their cooling water, 

wastewater, and storm water to a water 

of the United States through a point 

source regulated by an NPDES permit. 

In this scenario, the requirements for the 

cooling water intake structure would be 

specified in the facility’s NPDES permit. 

In the event that a Phase III facility’s 

only NPDES permit is a general permit 

(e.g., for oil and gas production) or a 

general permit for storm water 

discharges, the Agency anticipates that 

the Director may want to write an 

individual NPDES permit containing 

requirements for the facility’s cooling 

water intake structure. Alternatively, 

requirements applicable to cooling 

water intake structures could be 

incorporated into general permits. If 

requirements are placed into a general 

permit, they must meet the criteria set 

out at 40 CFR 122.28. 

The Agency also recognizes that some 

facilities that have or are required to 

have an NPDES permit might not own 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68455

3Note: the 100 MGD flow threshold also specifies 

withdrawal from certain source waterbody types. 

The other proposed flow thresholds are not linked 

to source waterbody types.

4Facilities ‘‘potentially covered by the Phase III 

rule’’ include all existing manufacturing and power 

producing facilities greater than 2 MGD that were 

not covered by the Phase II rule. There are an 

estimated 683 manufacturing and electric 

generating facilities (survey weighted) potentially 

covered by the Phase III rule, with a total design 

intake flow of 40,441 MGD.

and operate the intake structure that 

supplies their facility with cooling 

water. For example, manufacturing 

facilities operated by separate entities 

might be located on the same, adjacent, 

or nearby property(ies); one of these 

facilities might take in cooling water 

and then transfer it to other facilities 

prior to discharge of the cooling water 

to a water of the United States. Proposed 

§ 125.101(c) of today’s proposed rule 

would address such a situation. It 

provides that use of a cooling water 

intake structure includes obtaining 

cooling water by any sort of contract or 

arrangement with one or more 

independent suppliers of cooling water 

if the supplier withdraws water from 

waters of the United States but is not 

itself subject to regulations under 

316(b). This provision is intended to 

prevent facilities from circumventing 

the requirements of today’s proposed 

rule by creating arrangements to receive 

cooling water from an entity that is not 

itself subject to national categorical 

requirements (e.g., a facility that is not 

a point source). 

For facilities that have or are required 

to have NPDES permits that do not 

directly control the intake structures 

that supply their facilities with cooling 

water, proposed § 125.101(d) also 

provides, similar to the Phase I and II 

rules, that facilities that obtain cooling 

water from a public water system or use 

treated effluent are not deemed to be 

using a cooling water intake structure 

for purposes of this proposed rule. 

As stated in the preamble to the final 

Phase I rule (66 FR 65256, December 18, 

2001), the Agency would encourage the 

Director to closely examine scenarios in 

which a facility withdraws significant 

amounts of cooling water from waters of 

the United States but is not required to 

obtain an NPDES permit. As 

appropriate, under this proposed rule, 

the Director would apply other legal 

requirements, such as section 404 or 401 

of the Clean Water Act, the Coastal Zone 

Management Act, the National 

Environmental Policy Act, the 

Endangered Species Act, or similar State 

or Tribal authorities to address adverse 

environmental impact caused by cooling 

water intake structures at those 

facilities. 

F. What Are the Cooling Water Use and 

Design Intake Flow Thresholds in This 

Proposed Rule? 

This proposed rule would apply to 

existing facilities that meet the 

following thresholds: (1) Use at least 

twenty-five (25) percent of the water 

withdrawn exclusively for cooling 

purposes (measured on an average 

annual basis), and (2) have a total design 

intake flow equal to or greater than one 

of the three proposed thresholds , but 

are not subject to the Phase II rule. As 

previously discussed, EPA is proposing 

three possible flow threshold-based 

options in today’s proposed rule (i.e., 50 

MGD, 200 MGD, and 100 MGD 3). The 

facility would also have to meet the 

other applicability criteria defined in 

§ 125.101.

The 25 percent exclusive cooling use 

threshold is the same as employed in 

the Phase I and II regulations. As in the 

Phase I and Phase II rules, water used 

for both cooling and non-cooling 

purposes would not count towards the 

25 percent threshold. Thus, the 

proposed rule would not discourage the 

reuse of cooling water as process water 

or vice versa. Water that serves as 

cooling water but is either previously or 

subsequently used as process water 

would not be considered cooling water 

for purposes of determining whether the 

25 percent threshold is met. Water 

withdrawn for non-cooling purposes 

would include water withdrawn for 

warming by liquified natural gas 

facilities, water used to power hydroelectric plants, and water withdrawn for 

public water systems by desalinization 

facilities. 

Today’s notice proposes three 

different options for defining which 

existing facilities are Phase III existing 

facilities subject to categorical national 

requirements. These options include 

existing facilities having a total design 

intake flow of: 50 MGD or more; 200 

MGD or more; or 100 MGD or more if 

the facility withdraws water from an 

ocean, tidal river, estuary, or Great Lake. 

EPA is co-proposing these options 

because EPA believes that all three 

reflect potentially viable alternatives for 

balancing the many factors EPA 

considers in establishing best 

technology available for minimizing 

adverse environmental impact. These 

factors include the percentage of cooling 

water flow subject to national 

requirements, costs, benefits, costeffectiveness, permitting burden and the 

need for flexibility in implementation, 

projected closures, and potential 

impacts on small businesses. Each of 

these factors are permissible for 

consideration under the CWA and each 

of these co-proposed options will fulfill 

CWA requirements. For example, 

considerations of costs, benefits, 

economically practicability and costeffectiveness are appropriate factors 

under CWA sections 301 and 304 (e.g.,

see discussion of Agency authority in 

section I). In addition, EPA is required 

to consider small business impacts 

under the Regulatory Flexibility Act as 

amended by the Small Business 

Regulatory Enforcement Fairness Act. 

Accordingly, the discussion below 

focuses on the relative advantages and 

disadvantages of these co-proposed 

options and the proposed regulatory 

language reflects all three options. 

i. Total Design Intake Flow of 50 MGD 

or More 

Under this co-proposed option, 

facilities with a design intake flow of 50 

MGD or greater, and that meet the other 

criteria in § 125.101, would be subject to 

the performance standards and 

compliance alternatives proposed in 

today’s rule discussed below. Under this 

option, section 316(b) permit conditions 

for existing facilities with a design 

intake flow of less than 50 MGD would 

continue to be established on a case-bycase, best professional judgment basis. 

EPA is co-proposing the 50 MGD 

threshold based on several factors. With 

a 50 MGD flow threshold, the proposed 

rule would regulate 75 percent of the 

design intake capacity, and 23 percent 

of the facilities (155 facilities) 

potentially covered by the Phase III 

rule,4 thus subjecting the majority of 

design intake flows potentially included 

within the scope of the Phase III existing 

facility rule to national performance 

requirements. Use of a 50 MGD 

threshold would focus national section 

316(b) requirements on those Phase III 

existing facilities with moderate to large 

design intake flows. These facilities 

pose a greater potential for causing 

significant adverse environmental 

impacts than those withdrawing less 

than 50 MGD. Assuming full 

implementation of the Phase II rule and 

today’s proposed rule, at the coproposed 50 MGD threshold, section 

316(b) program requirements would 

regulate more than 97 percent of the 

total cooling water withdrawals 

associated with existing facilities. In 

addition, EPA estimates that use of a 50 

MGD threshold would avoid facility 

closures under this proposed rule, and 

would reduce the cost of the proposed 

rule to permittees compared with the 

costs of a lower threshold.

68456 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

5Unless otherwise noted, cost and benefit ranges 

reflect the use of alternative discount rates (3% and 

7%) in annualized 2003 dollars.

EPA estimates this option would cost 

$47.3 to $50.1 million 5 or $348,000 to 

$368,000 on average annually per 

facility. Quantified benefits are $1.5 

million to $1.9 million (annualized use 

value). Because this option covers the 

most facilities, it may also have the 

greatest ecological protection benefits, 

which EPA was not able to quantify. 

EPA estimates that this option would 

provide the highest quantified and 

monetized benefits of the co-proposed 

options but would also have the highest 

annualized costs, resulting in the lowest 

quantified benefits-to-cost ratio and the 

lowest (greatest negative) quantified net 

benefits among these options. See 

section X of this preamble for further 

discussion of benefits and costs.

Finally, the co-proposed 50 MGD 

threshold would exclude small 

businesses from national rule 

requirements. This is consistent with 

the recommendations of the Small 

Business Advocacy Review Panel final 

report that EPA analyze a range of 

potential thresholds, particularly those 

between 20 MGD and 50 MGD, as a 

means of reducing potential economic 

impacts on small businesses while still 

achieving desired environmental 

benefits under the rule. See section XI.C 

for additional information. EPA 

estimates that setting an applicability 

threshold at 50 MGD would exclude all 

existing small entities potentially 

subject to the Phase III rule. 

ii. Total Design Intake Flow of 200 MGD 

or More 

Under this co-proposed option, 

facilities with a design intake flow of 

200 MGD or greater and that meet the 

other criteria in § 125.101, would be 

subject to the performance standards 

and compliance alternatives proposed 

in today’s notice and discussed above. 

Under this option, section 316(b) permit 

conditions for existing facilities not 

covered under the Phase II rule, with a 

design intake flow of less than 200 

MGD, would continue to be established 

on a case-by-case, best professional 

judgment basis. 

EPA is co-proposing the 200 MGD 

threshold based on several factors. With 

a 200 MGD flow threshold, the proposed 

rule would regulate 45 percent of the 

design intake capacity and 

approximately 5% of the facilities 

potentially covered by the Phase III rule. 

Assuming full implementation of the 

Phase II rule and today’s proposed rule, 

at the co-proposed 200 MGD threshold, 

section 316(b) program requirements 

would regulate more than 94 percent of 

the total cooling water withdrawals 

associated with existing facilities 

withdrawing greater than 2 MGD.

EPA estimates this option would cost 

$22.8 to $24.1 million or $912,000 to 

$964,000 on average annually per 

facility. Quantified benefits are $0.98 to 

$1.26 million (annualized use value). 

The option would have a higher benefitto-cost ratio yielding 66 percent of the 

quantified benefits at 48% of the costs 

and greater (lower negative) quantified 

net benefits compared to the 50 MGD 

option. 

EPA estimates that use of a 200 MGD 

threshold would avoid facility closures 

under this proposed rule and would 

exclude all existing small entities. 

iii. Facility Has a Total Design Intake 

Flow of 100 MGD or More and 

Withdraws Water From an Ocean, Tidal 

River, Estuary, or Great Lake 

Under this co-proposed option, 

facilities located on estuaries, oceans, 

tidal rivers or streams, or one of the 

Great Lakes, with a design intake flow 

of 100 MGD or greater, and that meet the 

other criteria in § 125.101, would be 

subject to the performance standards 

and compliance alternatives proposed 

in today’s rule and discussed below. 

Under this regulatory option, section 

316(b) permit conditions for all existing 

facilities not covered under the Phase II 

rule, and located on freshwater rivers 

and streams or lakes and reservoirs, or 

with a design intake flow of less than 

100 MGD would continue to be 

established on a case-by-case, best 

professional judgment basis. 

Under this co-proposed option, 4 

percent of the facilities potentially 

subject to regulation under Phase III 

would be subject to national 

requirements, and 18 percent of total 

design intake capacity associated with 

potential Phase III facilities would be 

addressed by such national 

requirements. Assuming full 

implementation of the Phase II rule and 

today’s proposed rule, at the coproposed 100 MGD threshold, section 

316(b) program requirements would 

regulate more than 91 percent of the 

total cooling water withdrawals 

associated with existing facilities. 

EPA estimates this option would cost 

$17.6 to $18.2 million or $926,000 to 

$958,000 on average annually per 

facility. Quantified benefits are $1.1 to 

1.4 million (annualized use value). EPA 

estimates that this option would provide 

the second highest quantified benefits of 

the co-proposed options, and would 

have the lowest annualized costs when 

compared with the other two options, 

resulting in the highest quantified 

benefits-to-costs ratio and highest (least 

negative) quantified net benefits among 

the three options. This option would 

provide about 75 percent of the 

quantified benefits of the 50 MGD flow 

threshold option at about 36 percent of 

the cost by focusing the rule 

requirements on the most sensitive 

waterbodies. 

EPA estimates that use of a 100 MGD 

threshold would avoid facility closures 

under this proposed rule and would 

exclude all existing small entities. 

EPA requests comment on all aspects 

of each of these co-proposed options, 

including whether lower (e.g., 20 MGD) 

or higher (e.g., 250 MGD) thresholds 

should be considered, as well as 

whether different conditions (e.g.,

related to waterbody type) should be 

combined with these or other 

thresholds. EPA also solicits comment 

on the resource implications for State 

permitting agencies associated with 

each of these options. 

G. When Would a Phase III Existing 

Facility and New Offshore Oil and Gas 

Extraction Facility Be Required To 

Comply With Any New 316(b) 

Requirements? 

If EPA were to promulgate today’s 

proposed rule, the final rule would 

become effective sixty (60) days after the 

date of publication in the Federal 

Register. After the effective date of any 

such final regulation, existing 

manufacturers and new offshore oil and 

gas extraction Phase III facilities, 

including existing facilities not 

currently subject to cooling water intake 

requirements under 40 CFR 125, would 

need to comply when an NPDES permit 

containing requirements consistent with 

the final rule is issued to the facility (see

§ 125.100 and § 125.132). Under current 

NPDES program regulations, this will 

occur when a new NPDES permit is 

issued or when an existing NPDES 

permit is issued, reissued, or modified 

or revoked and reissued. As in Phase II, 

the proposed rule for Phase III existing 

facilities includes special provisions to 

allow sufficient time to complete a 

Comprehensive Demonstration Study 

during the first permit renewal 

following promulgation of the Phase III 

rule (see § 125.104(a)(2)(ii)). 

A discussion of the timing of 

implementation of this proposed rule, if 

promulgated, is provided in section VII. 

H. What Special Definitions Apply to 

This Proposal? 

EPA is proposing specialized 

definitions to clarify which facilities are 

subject to national categorical 

requirements. For the new oil and gas 

extraction facility requirements in 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68457

Subpart N, EPA is proposing five new 

definitions to clarify those facilities 

subject to the requirements. These 

definitions are set forth in the proposed 

regulations at § 125.133 and include 

‘‘new offshore oil and gas extraction 

facilities,’’ ‘‘offshore liquified natural 

gas import terminals,’’ ‘‘seafood 

processing vessels,’’ ‘‘sea chest’’ and 

‘‘fixed facility’’). The remainder of the 

proposed definitions are the same as 

those found in the final Phase I 

regulations; however, not all of the 

definitions from Phase I regulations 

have been used as they are not all 

applicable to these proposed Subpart N 

regulations. 

EPA is also proposing definitions for 

Phase III existing facilities in Subpart K 

at § 125.102. All of these definitions are 

borrowed from both Phase I and Phase 

II and remain unchanged, except for the 

cutoff date in the definition of ‘‘existing 

facility’’ for new versus existing offshore 

oil and gas extraction facilities. Similar 

to the definitions for subpart N 

described above, not all of the 

definitions from Phase II regulations 

have been used as they are not all 

applicable to these proposed Subpart K 

regulations. 

EPA solicits comment on these 

regulatory definitions.

III. Summary of Data Collection 

Activities 

For the Phase III proposed rule, EPA 

focused its data collection activities on 

section 316(b) survey data 

supplemented by available existing data 

sources including the data developed 

for the Phase I and Phase II rules. 

A. Survey Questionnaires 

As discussed in the preamble to the 

Phase II final rule (69 FR 41576), EPA’s 

industry survey effort consisted of a 

two-phase process. EPA administered a 

screener questionnaire focused on 

nonutility and manufacturing facilities 

as the first phase of this data collection 

process. The screener questionnaire 

provides information on cooling water 

intake capacity, sources of the water, 

intake structure types, and technologies 

used to minimize adverse 

environmental impacts. It also provides 

data on facility and parent firm 

employee numbers and revenues. This 

information was used to design a 

sampling plan for the subsequent 

detailed questionnaire. Following the 

screener survey, the Agency 

administered either a short technical or 

a detailed questionnaire to utility, 

nonutility, and manufacturing facilities, 

as described below. The two-phase 

survey was designed to collect 

representative data from a sample group 

of those categories of facilities 

potentially subject to section 316(b) 

regulation for use in rule development. 

In 1997, EPA estimated that over 

400,000 facilities could potentially be 

subject to a cooling water intake 

regulation. Given the large number of 

facilities potentially subject to 

regulation, EPA decided to focus its data 

collection efforts on six industrial 

categories that, as a whole, were 

estimated to account for over 99 percent 

of all cooling water withdrawals. These 

six sectors were: Utility Steam Electric, 

Nonutility Steam Electric, Chemicals & 

Allied Products, Primary Metals 

Industries, Petroleum & Coal Products, 

and Paper & Allied Products. At the 

time of the survey, there were about 

48,500 facilities in these six categories. 

EPA believes that this approach 

provided a sound basis for assessing 

best technologies available for 

minimizing adverse environmental 

impacts. 

The screener survey focused on 

nonutility and manufacturing facilities. 

EPA developed the sample frame (list of 

facilities) for the screener questionnaire 

using public data sources as described 

in the Information Collection Request 

(DCN 3–3084-R2 in Docket W–00–03). 

Facilities chosen for the screener 

questionnaire represented a statistical 

sample of the entire universe of 

nonutility and manufacturing facilities 

potentially subject to cooling water 

intake regulations. EPA did not conduct 

a census of all facilities (i.e. send a 

survey to all facilities) for the screener 

questionnaire because of the burden 

associated with surveying a large 

number of facilities. Rather, EPA refined 

the industry data using industry-specific 

sources to develop sample frames and 

mailing lists. EPA believes the sample 

frame was sufficient to characterize the 

operations of each industrial category. 

EPA sent the screener questionnaire to 

2600 facilities identified in the sample 

frame as follows: (1) All identified 

steam electric nonutility power 

producers, both industrial selfgenerators and nonindustrial generators 

(1050 facilities, of which 853 

responded); and (2) a sample of 

manufacturers from the four non-steam 

electric industrial categories: paper and 

allied products, chemical and allied 

products, petroleum and coal products, 

and primary metals (1550 facilities, of 

which 1217 responded). EPA adjusted 

the sample frame for the screener 

questionnaire to account for several 

categories of non-respondents, 

including facilities with incorrect 

address information, facilities no longer 

in operation, and duplicate mailings. 

Through follow-up phone calls and 

mailings, EPA increased the response 

rate for the screener questionnaire to 95 

percent. The screener questionnaire was 

not sent to utilities, all of which were 

believed to be identified accurately 

using the publicly-available data 

described above. 

A sample of manufacturing and 

nonutility facilities identified as inscope (subject to regulation) by the 

screener questionnaire and all utilities 

then were sent either a short technical 

or a detailed questionnaire. A total of 

878 utility facilities, 343 nonutility 

facilities and 191 manufacturing 

facilities received one of the two 

questionnaires (short technical or 

detailed) during the second phase of the 

survey. For utilities, nonutilities, and 

other manufacturing facilities, EPA 

selected a random sample of these 

eligible facilities to receive a detailed 

questionnaire. The sample included 282 

utility facilities and 181 nonutility 

facilities. All 191 manufacturing 

facilities received a detailed 

questionnaire. For nonutilities and 

utilities, those facilities not selected to 

receive a detailed questionnaire were 

sent a Short Technical Questionnaire. 

EPA’s approach in selecting a sample 

involved the identification of 

population strata, the calculation of 

sample sizes based on desired levels of 

precision, and the random selection of 

sites given the sample size calculations 

within each stratum. More detail is 

provided in the report entitled 

‘‘Statistical Summary for Cooling Water 

Intakes Structures Surveys’’ (See DCN 

3–3077 in Docket W–00–03). 

Five questionnaires were distributed 

to different industrial groups. They 

were: (1) Detailed Industry 

Questionnaire: Phase II Cooling Water 

Intake Structures—Traditional Steam 

Electric Utilities; (2) Short Technical 

Industry Questionnaire: Phase II Cooling 

Water Intake Structures—Traditional 

Steam Electric Utilities (sent to both 

utilities and nonutilities); (3) Detailed 

Industry Questionnaire: Phase II Cooling 

Water Intake Structures—Steam Electric 

Nonutility Power Producers; (4) 

Detailed Industry Questionnaire: Phase 

III Cooling Water Intake Structures—

Manufacturers; and, (5) Watershed Case 

Study Short Questionnaire. The 

questionnaires provided EPA with 

technical and financial data necessary 

for developing this proposed regulation. 

Specific details about the questions may 

be found in EPA’s Information 

Collection Request (DCN 3–3084–R2 in 

Docket W–00–03) and in the 

questionnaires (see DCN 3–0030 and 3–

0031 in Docket W–00–03 and Docket for 

today’s proposal); these documents are 

also available on EPA’s Web site

68458 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

(http://www.epa.gov/waterscience/316b/

question/). 

EPA also conducted outreach to 

industry groups, environmental groups, 

and other government entities in the 

development, testing, and refinement of 

a second round of surveys, the section 

316(b) Phase III Industry Technical and 

Economic Questionnaires, which have 

been used as an additional source of 

data for the Phase III rule. The Phase III 

surveys, published in September 2003, 

were sent to offshore oil and gas 

extraction facilities and seafood 

processing vessels. Specific details 

about the questions may be found in 

EPA’s Information Collection Request 

(DCN 7–0007) and in the questionnaires 

(see DCN 7–0008) in the Docket for 

today’s proposal); these documents are 

also available on EPA’s Web site (http:/

/www.epa.gov/waterscience/316b/

question/). In addition, EPA utilized a 

survey conducted by the International 

Association of Drilling Contractors 

(IADC) in 2003 to access technical data 

on cooling water use by offshore oil and 

gas extraction facilities, including fixed 

platforms and mobile units.

B. Existing Data Sources 

EPA collected data from multiple 

sources, both public and proprietary, in 

order to compile an accurate profile of 

the potentially regulated community. 

EPA reviewed information collected by 

other Federal agencies, as well as data 

compiled by private companies. In those 

instances where databases are 

considered confidential, or where raw 

data was unavailable for review, EPA 

did not consider the information. 

Summaries of the reviewed data sources 

are listed below. 

1. Electric Generators 

EPA collected a substantial amount of 

data on the electric power generating 

industry in the course of the Phase I, II, 

and III rulemakings. For example, EPA 

used data from the Federal Energy 

Regulatory Commission (FERC) (Forms 

1 and 1–F), the Energy Information 

Administration (EIA) (Forms EIA–412, 

–767, –860, –861, –867), the Rural 

Utility Service (RUS) (Form 12), as well 

as information from the U.S. Nuclear 

Regulatory Commission (NRC), the 

Utility Data Institute (UDI), and the 

Edison Electric Institute (EEI). For 

detailed information about these data 

sources, refer to the proposed rule for 

Phase II (67 FR 17131). 

While electric power generators do 

not meet the proposed flow thresholds 

and are therefore not subject to Phase III 

national requirements (refer to section 

VI for further details), EPA did use the 

aforementioned data on electric power 

generators in reaching this decision. 

Data was used to assess, for example, 

the cooling water intake flows and the 

amount of electricity generated, and as 

part of the determination of economic 

impacts of the various compliance 

alternatives that EPA considered in 

developing the proposed rule. 

2. Manufacturers 

In order to identify potential 

entrainment impacts at facilities with a 

design intake flow below 50 MGD, EPA 

conducted a field study of six 

manufacturers in the Spring of 2002. 

This study was conducted in the midAtlantic region, with particular focus on 

the Delaware River and its tributaries. 

Sampling sites were selected for three 

freshwater and three tidal river 

facilities. EPA conducted two 4-day 

sampling events at each facility and 

conducted measurements of the 

following variables: site location and 

sampling point, facility intake flow rate, 

sampling pump volume, sampling time 

and duration and sample chain of 

custody. Additional physicochemical 

variables were measured, including the 

following: temperature, dissolved 

oxygen (DO), pH, and conductivity. 

Taxonomic identification was 

conducted for all organisms collected 

and results are provided in the Data 

Report for Small Facility 

Ichthyoplankton Entrainment Sampling 

for the Development of the 316(b) Phase 

III Rule for Cooling Water Intake 

Structures (EPA, 2003) (DCN 7–0009). 

In mid-June 2003, in order to 

supplement the biological data used for 

estimating baseline impingement 

mortality and entrainment rates, EPA 

compiled a list of facilities who had 

responded in their industry 

questionnaire that they had conducted a 

biological study. Some of these facilities 

were then requested to provide EPA 

with copies of these studies. The first 

data collection effort focused on 

facilities that are located on an inland 

waterbody and have a high average 

daily intake flow. Preference was given 

to facilities located on Lake Michigan 

and the Columbia River, as these 

waterbodies (and more broadly, these 

regions of the country) were identified 

as having inadequate data for future 

analysis of Phase III impingement 

mortality and entrainment rates. The 

second data collection effort focused on 

facilities located in particular U.S. Fish 

and Wildlife Service fish regions to be 

used by EPA in calculation of benefits 

for the rule. The last data collection 

effort focused specifically on Phase III 

facilities. In total, 90 facilities were 

contacted and these contacts resulted in 

collection of 63 biological studies (33 of 

which were from Phase III facilities) for 

use in estimation of baseline 

impingement mortality and entrainment 

rates. 

3. Offshore Oil and Gas Extraction 

Facilities and Seafood Processing 

Vessels 

EPA conducted extensive research on 

the use of cooling water by offshore oil 

and gas extraction facilities and seafood 

processing vessels to determine whether 

these industry sectors would be subject 

to regulation under the Phase III rule. 

Information sources included industry 

surveys (one administered by EPA in 

conjunction with the International 

Association of Drilling Contractors 

(IADC) and another solely by EPA); 

industry databases and other publicly 

available information, and meetings 

with government and industry 

representatives. The survey efforts are 

described in section III.A above. 

In April and May of 2003, EPA 

conducted site visits and field 

interviews at offshore oil and gas 

extraction facilities and seafood 

processing vessels to evaluate 

technologies in use for reducing 

impingement mortality and/or 

entrainment at these facilities. EPA 

employed the services of a specialized 

naval engineer to conduct these site 

visits and field interviews. Site visits 

were conducted at platforms and 

vessels. In addition, field interviews 

were conducted with industry 

personnel. The data collected from these 

visits and interviews included 

geographic data, intake design and 

impingement and entrainment 

technologies in place, impingement and 

entrainment problems encountered as 

well as any methods utilized in 

resolving such problems (See DCN 7–

0010). 

Sources used by EPA to characterize 

the offshore seafood processing industry 

included the following: 

• U.S. Food and Drug Administration 

(FDA), Center for Food Safety and 

Applied Nutrition, January 2003, which 

included a list of U.S. FDA-European 

Union (EU) Exporters, Processing 

Vessels. 

• Alaska Department of Fish and 

Game 2002 Intent to Operate Listing. 

• Water Discharge Permits (PCS) 

database searches by SIC codes 2091, 

2092 and 2077.

• Department of Transportation 

Maritime Administration (MARAD) 

Web site: http://www.marad.dot.gov/

publications/index.html and http://

www.marad.dot.gov/Marad_Statistics/

index.html. 

• U.S. Coast Guard Merchant Vessels 

of the United States database. 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68459

6The entire Phase III universe includes facilities 

with a design intake flow greater than 2 MGD which 

use at least 25 percent of the water withdrawn 

exclusively for cooling, and are not covered by 

Phase II. Offshore oil and gas extraction facilities 

are not included in this estimate.

• U.S. Coast Guard PSIX/MSIS 

databases. 

• National Transportation Safety 

Board database. 

• U.S. Army Corps of Engineers, 

Navigation Data Center, Waterborne 

Commerce Statistics Center. 

• The Alaska Department of Fish and 

Game Division of Commercial Fisheries 

Web site: http://www.cf.adfg.state.ak.us. 

• The At-Sea Processors Association 

Web site: http://www.atsea.org/. 

• EPA Region 10 Database of seafood 

processors permitted in Alaska. 

• Technical Development Document 

(TDD) for the Uniform National 

Discharge Standards (UNDS) program 

(found at http://unds.bah.com/TDD.pdf) 

(Appendix A: Seawater Cooling 

Overboard Discharge Report). 

• National Marine Fisheries Service 

Web site, Restricted Access 

Management Program, http://

www.fakr.noaa.gov/ram/default.htm.

• National Marine Fisheries Services 

Web site, link to American Fisheries Act 

(AFA) permits: http://

www.fakr.noaa.gov/ram/afa.htm#list. 

• Several vessel operators, naval 

architects, engineers and regulators. 

C. Data Provided to EPA by Industrial, 

Trade, Consulting, Scientific or 

Environmental Organizations or by the 

General Public 

Since 1993, EPA has been developing 

cooling water regulations as part of a 

collaborative effort with industry and 

environmental stakeholders, other 

Federal agencies, the academic and 

scientific communities, and the general 

public. As a result, EPA has reviewed 

and considered the many documents, 

demonstration studies, scientific 

analyses, and historical perspectives 

offered in support of each phase of the 

regulatory process. For example, during 

the early stages of data gathering, EPA 

created an internal library of reference 

documents addressing cooling water 

intake structure issues. This library 

currently holds over 2,800 documents, 

many of which were referenced in the 

rulemaking process and are contained in 

the record (see the following paragraph 

for further information on the record). 

The library contains a thorough 

collection of a wide variety of 

documents, including over 80 section 

316(b) demonstration documents, over 

300 impingement and entrainment 

studies, over 100 population modeling 

studies, over 500 fish biology and stock 

assessment documents, over 350 

biological studies commissioned by 

power generators, over 80 NPDES 

decisions and NPDES or SPDES-related 

documents, over 120 intake technology 

reports, over 10 databases on the electric 

power industry, and documents from 

interagency committees such as the 

Ohio River Valley Water Sanitation 

Commission (ORSANCO). 

In addition, the record for the Phase 

I new facility rule contains nearly 1,000 

documents (research articles, databases, 

legal references, memorandums, 

meeting notes, and other documents), 

consisting of approximately 47,000 

pages of supporting material available 

for public review. And the record for the 

Phase II existing facility rule contains 

over 2600 additional documents, 

comprising approximately 125,000 

pages of supporting material. 

Finally, EPA has worked extensively 

with stakeholders from industry, public 

interest groups, State agencies, and 

other Federal agencies in the 

development of this proposed rule. 

These public participation activities 

have focused on various section 316(b) 

issues, including general issues, as well 

as issues relevant to development of the 

Phase II rule and issues relevant to this 

proposed Phase III rule. See section 

I.C.6 of this preamble for a discussion of 

key public participation activities.

IV. Overview of Facility Characteristics 

(Cooling Water Systems & Intake 

Structures) for Industries Potentially 

Subject to Proposed Rule 

Today’s proposed rule would apply 

national categorical requirements to two 

groups of facilities that use cooling 

water intake structures to withdraw 

water from waters of the U.S.: existing 

manufacturing and industrial facilities 

and new offshore oil and gas extraction 

facilities. 

A. Overview of Potentially Regulated 

Phase III Universe 

EPA’s data collection efforts largely 

focused on five industrial sectors: small 

flow electric power generators (both 

utilities and nonutilities withdrawing 

less than 50 MGD); chemicals and allied 

products (SIC Major Group 28); primary 

metals industries (SIC Major Group 33); 

paper and allied products (SIC Major 

Group 26); and petroleum and coal 

products (SIC Major Group 29). The 

latter four sectors use a significant 

portion of the cooling water withdrawn 

among all manufacturing industries. 

EPA also identified other industry 

sectors that use cooling water including: 

transportation equipment (SIC Major 

Group 37); lumber and wood products 

(SIC Major Group 24); rubber and 

plastics products (SIC Major Group 30); 

food and kindred products (SIC Major 

Group 20); tobacco products (SIC Major 

Group 21); and machinery (SIC Major 

Group 35) (see DCN 7–0011). A more 

comprehensive list of industries that use 

cooling water and their NAICS and SIC 

Codes can be found in section A of the 

Supplementary Information. Although 

EPA’s survey data collection efforts 

were not designed to collect data from 

industries other than the five listed 

above, data were collected from the 

following industries: food processing; 

aircraft engines and engine parts; 

cutlery; sawmills and planing mills; 

finishers of broad woven fabrics of 

cotton; potash, soda and borate 

minerals; iron ores; and sugarcane and 

sugar beets. These data from other 

industries, while not a statistically 

derived sample, confirm that the five 

primary industry sectors discussed 

above account for the vast majority of 

Phase III cooling water use. The data 

also suggest that the intake structure 

design and construction at these 

industries were substantially similar to 

the industries for which EPA did collect 

data. 

Of the estimated 683 manufacturing 

and electric generator facilities (survey 

weighted estimate, as described in the 

Technical Development Document

EPA–821–R–04–015, DCN 7–0004) 

within the Phase III universe,6

approximately 225 (33 percent) belong 

to the pulp and paper sector, 185 (27 

percent) belong to the chemical sector, 

88 (13 percent) belong to the metals 

sector, and 39 (6 percent) belong to the 

petroleum sector. EPA also surveyed 29 

facilities in other industry sectors 

(discussed above, all of which are 

potentially subject to the Phase III rule) 

in the detailed questionnaire, and those 

data are also being considered in today’s 

proposed rule. In addition, an estimated 

117 (17 percent) electric generating 

facilities are included within the Phase 

III universe.

The information below is generally 

based on data collected from the Short 

Technical Industry Questionnaire, the 

Detailed Industry Questionnaire, and 

the Phase III Industry Technical and 

Economic Questionnaires. Additional 

detail discussing the entire Phase III 

universe as well as facilities subject to 

the uniform national standards and 

facilities subject to permitting based on 

best professional judgment can be found 

in the Technical Development 

Document. 

As explained in section V of this 

preamble, there are five main categories 

of surface water used as sources of 

cooling water. The source of surface 

water withdrawn for cooling is an 

68460 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

important factor in determining 

potential environmental impacts. An 

estimated 11 (2 percent) facilities 

withdraw cooling water from an ocean; 

an estimated 39 (6 percent) facilities 

withdraw cooling water from an estuary 

or tidal river; an estimated 496 (73 

percent) facilities withdraw cooling 

water from a freshwater stream or river; 

an estimated 60 (9 percent) facilities 

withdraw cooling water from a lake or 

reservoir; and an estimated 77 (11 

percent) facilities withdraw cooling 

water from one of the Great Lakes. EPA 

estimates a total design intake flow of 

40,441 MGD and total actual intake flow 

of 21,624 MGD for the Phase III 

universe. 

Of the facilities within the Phase III 

universe, 303 (44 percent) employ oncethrough cooling systems, 198 (29 

percent) use closed-cycle recirculating 

cooling systems, 121 (18 percent) use 

‘‘combination’’ systems, and 61 (9 

percent) use an ‘‘other’’ type of system. 

An estimated 286 (42 percent) facilities 

have installed a cooling tower. Note that 

not all facilities that have installed a 

cooling tower are classified as using 

closed-cycle recirculating cooling 

systems, as some facilities with multiple 

cooling water systems may be 

‘‘combination’’ systems that employ 

both closed-cycle and once-through 

cooling. Facilities may also list ‘‘helper’’

cooling towers, which are generally 

used to mitigate discharge temperatures 

and do not affect intake flows. Since 

facilities may have more than one 

cooling water system, these estimates 

are based on the predominant cooling 

water system at each facility. 

Facilities within this universe also 

may have more than one cooling water 

intake structure configuration. 

Therefore, in providing the information 

on intake structures, a facility may be 

counted multiple times (as many times 

as it has distinct cooling water intake 

structure configurations). Thus, of the 

facilities within the Phase III universe, 

683 facilities represent an estimated 747 

total cooling water intake structure 

configurations. Of these, an estimated 

359 (48 percent) have a shoreline intake, 

216 (29 percent) have a submerged 

offshore intake, 123 (16 percent) 

withdraw cooling water through a canal 

or channel, 49 (7 percent) have an 

intake situated in a bay or cove, and 47 

(6 percent) are estimated to have some 

other type of intake or provided no 

information. 

B. Existing Manufacturers and 

Industrial Facilities Potentially Subject 

to Proposed National Requirements 

This section presents the number of 

facilities that would be potentially 

subject to uniform national performance 

standards under each of the three coproposed options. See section VI of this 

preamble and Chapter 4 of the 

Technical Development Document for 

details on the other options considered 

but not presented as part of today’s 

proposal. Exhibit IV–1 provides the 

number of existing facilities by design 

intake flow and waterbody type. 

Throughout the rest of this section, 

tabulations of less than five facilities are 

combined to prevent disclosure of an 

individual facility’s information.

EXHIBIT IV–1.—TOTAL NUMBER OF PHASE III MANUFACTURING FACILITIES POTENTIALLY SUBJECT TO THE REGULATIONS

BY DESIGN INTAKE FLOW AND WATERBODY TYPE

Facility design intake flow 

Waterbody 

Freshwater rivers 

and streams, 

lakes, and reservoirs 

Oceans, estuaries, 

tidal rivers and 

streams, and 

Great Lakes 

All waterbodies 

2 MGD or greater 1 .................................................................................................... 556 127 683 

20 MGD or greater 1 .................................................................................................. 302 92 394 

50 MGD or greater 2 .................................................................................................. 103 52 155 

100 MGD or greater 2 ................................................................................................ 47 26 73 

200 MGD or greater 2 ................................................................................................ 16 15 31 

1 Includes those electric generating facilities defined as part of the Phase III universe. 

2Only includes manufacturing facilities. 

1. National Requirements for Facilities 

With a Design Intake Flow of 50 MGD 

and Above 

EPA’s 50 MGD option would require 

an estimated 155 facilities to meet the 

uniform national standards that 

implement section 316(b) (facilities with 

a design intake flow of 50 MGD and 

above and meeting applicability criteria 

at § 125.101). These facilities are 

comprised of an estimated 56 (36 

percent) within the chemical sector, 42 

(27 percent) within the pulp and paper 

sector, 30 (19 percent) within the metals 

sector, 17 (11 percent) within the 

petroleum sector, and an estimated total 

of 10 facilities (7 percent) within the 

‘‘other’’ category; no seafood processing 

vessels would meet the applicability 

criteria at § 125.101. 

An estimated 6 (4 percent) facilities 

withdraw cooling water from an ocean; 

an estimated 15 (10 percent) facilities 

withdraw cooling water from an estuary 

or tidal river; an estimated 93 (60 

percent) facilities withdraw cooling 

water from a freshwater stream or river; 

an estimated 10 (6 percent) facilities 

withdraw cooling water from a lake or 

reservoir; and an estimated 31 (20 

percent) facilities withdraw from one of 

the Great Lakes. 

EPA has estimated that these 155 

facilities possess a total design intake 

flow of 30,136 MGD and an actual 

intake flow of 16,582 MGD. 

Further, of the cooling water system 

types in use at these 155 facilities, 68 

(44 percent) of these systems are oncethrough cooling systems, 6 (4 percent) 

are closed-cycle recirculating cooling 

systems, 56 (36 percent) are 

‘‘combination’’ systems, and 25 (16 

percent) use an ‘‘other’’ type of system. 

An estimated 52 (33 percent) facilities 

have installed a cooling tower. As noted 

above, not all facilities that have 

installed a cooling tower are classified 

as closed-cycle recirculating cooling 

system. 

These 155 facilities possess an 

estimated 211 total cooling water intake 

structure configurations. Of these, an 

estimated 46 (23 percent) facilities 

withdraw cooling water through a canal 

or channel, 17 (11 percent) have an 

intake situated in a bay or cove, 89 (59 

percent) have a shoreline intake, 31 (20 

percent) have a submerged offshore 

intake, and 28 (5 percent) are estimated 

to have some other type of intake or 

provide no information. 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68461

2. National Requirements for Facilities 

With a Design Intake Flow of 200 MGD 

and Above 

EPA’s 200 MGD option would require 

an estimated 31 facilities to meet the 

uniform national standards that 

implement section 316(b) (facilities with 

a design intake flow of 200 MGD and 

above and meeting applicability criteria 

at § 125.101). These facilities are 

comprised of an estimated 15 (48 

percent) within the metals sector, 7 (23 

percent) within the chemical sector, and 

9 (29 percent) within the petroleum 

sector, the pulp and paper sector, or the 

‘‘other’’ industries category. 

An estimated 5 (16 percent) facilities 

withdraw cooling water from an estuary 

or tidal river; an estimated 16 (50 

percent) facilities withdraw cooling 

water from a freshwater stream or river, 

lake, or reservoir; and an estimated 10 

(32 percent) facilities withdraw from 

one of the Great Lakes. EPA estimates 

that there are no manufacturing 

facilities with a design intake flow of 

200 MGD or greater that withdraw from 

an ocean. 

EPA has estimated that these 31 

facilities possess a total design intake 

flow of 18,340 MGD and an actual 

intake flow of 11,472 MGD. 

Further, of the cooling water system 

types in use at these 31 facilities, 17 (55 

percent) of these systems are oncethrough cooling systems, and 14 (45 

percent) are ‘‘combination’’ or ‘‘other’’

systems. An estimated 10 (32 percent) 

facilities have installed a cooling tower 

or closed-cycle recirculating system. 

These 31 facilities possess an 

estimated 70 total cooling water intake 

structure configurations. Of these, an 

estimated 16 (23 percent) facilities 

withdraw cooling water through a canal 

or channel, 24 (34 percent) have a 

shoreline intake, and 30 (43 percent) 

have a submerged offshore intake.

3. National Requirements for Coastal 

and Great Lakes Facilities With a Design 

Intake Flow of 100 MGD and Above 

EPA’s third proposed option would 

establish national requirements for 

facilities with 100 MGD or more design 

intake flows when the intake is on 

coastal waters (including oceans, tidal 

rivers and streams, and estuaries) or one 

of the Great Lakes. This option would 

require an estimated 26 facilities to meet 

the uniform national standards. These 

facilities are comprised of an estimated 

12 (46 percent) within the metals sector, 

7 (27 percent) within the chemical 

sector, and the remaining 7 (27 percent) 

within the pulp and paper sector, the 

petroleum sector, or the ‘‘other’’

industries. EPA estimated that these 26 

facilities possess a total design intake 

flow of 7,661 MGD and actual intake 

flow of 4,753 MGD. 

Further, of the predominant system 

types in use at these 26 facilities, 13 (50 

percent) of these systems are oncethrough cooling systems. The other 

estimated 13 facilities use a 

combination cooling system and have 

installed a cooling tower. These 26 

facilities possess an estimated 47 total 

cooling water intake structure 

configurations. Of these, an estimated 

11 (23.4 percent) facilities withdraw 

cooling water through a canal or 

channel, 21 (44.7 percent) have a 

shoreline intake, and 15 (31.9 percent) 

have a submerged offshore intake. 

C. New Offshore Oil and Gas Extraction 

Facilities Subject to Proposed National 

Requirements 

Today’s proposed rule would also 

apply national requirements to new 

offshore (offshore includes coastal) oil 

and gas extraction facilities. EPA is 

presently considering new facilities 

within the offshore oil and gas 

extraction industry as classified under 

SIC Major Group 13. EPA projects that 

there will be an estimated 124 new 

offshore oil and gas extraction facilities 

over the next 20 years. Most of these 

facilities will withdraw less than 50 

MGD estimated design intake flow and 

will include both mobile offshore 

drilling units (MODUs) and deepwater 

platforms in the Gulf of Mexico and 

Alaska. Only three new MODUs are 

projected to have a design intake flow 

of greater than 50 MGD within the 

period of analysis. EPA’s projection of 

new oil and gas extraction facilities is 

based on historical refurbishment of old 

rigs including MMS data on new 

platform installations over the last 10 

years. See Part C of the EA for more 

information. Note most new offshore 

and coastal oil and gas extraction 

facilities to which today’s proposed rule 

would apply would not be operating in 

estuaries, except for those operating in 

Cook Inlet.

V. Environmental Impacts Associated 

With Cooling Water Intake Structures 

Through the Phase III rulemaking, 

EPA intends to minimize the adverse 

environmental impacts of cooling water 

intake structures by reducing the 

number of aquatic organisms lost as a 

result of water withdrawals associated 

with these structures or through 

restoration measures that compensate 

for these losses. In the Phase I rule for 

new facilities and in the Phase II rule for 

certain existing facilities, EPA provided 

an overview of the magnitude and type 

of environmental impacts associated 

with cooling water intake structures, 

including several illustrative examples 

of documented environmental impacts 

at existing facilities (see 65 FR 49071–

4; 66 FR 65262–5; 67 FR 17136–40; and 

69 FR 41587–88). 

For the same reasons set forth in the 

preamble to the rules for Phase I and 

Phase II facilities (66 FR 65256, 65291–

65297 and 69 FR 41586–90), EPA has 

determined that there are multiple types 

of undesirable and unacceptable 

environmental impacts that may be 

associated with Phase III facilities, 

depending on conditions at the 

individual site. These types of impacts 

include entrainment and impingement 

which can contribute to reductions of 

threatened and endangered species; and 

ecologically critical aquatic organisms, 

including important elements of the 

food chain; diminishment of a 

population’s compensatory reserve; 

losses to populations, including 

reductions of indigenous species 

populations, commercial and 

recreational fisheries; and stresses to 

overall communities and ecosystems as 

evidenced by reductions in diversity or 

other changes in system structure and 

function. Based on the analyses in and 

for the same reasons set forth in the 

preambles to the Phase I rule (66 FR 

65256, 65291–65297) and Phase II rule 

(69 FR 41598–41601), EPA has selected 

reductions in impingement mortality 

and entrainment as a quick, certain, and 

consistent metric for comparing facility 

performance to applicable requirements 

for Phase III facilities. Further, EPA 

considered the non-water quality 

environmental impacts for this rule 

(e.g., impacts on energy use and 

associated increases in emissions) and 

found them to be acceptable at a 

national level. This section describes 

the environmental impacts associated 

with cooling water withdrawals and 

why they are of concern to the Agency. 

Impingement takes place when 

organisms are trapped against cooling 

water intake screens by the force of the 

water being drawn through the cooling 

water intake structure. The velocity of 

the water withdrawal by the cooling 

water intake structure may prevent 

proper gill movement, remove fish 

scales, and cause other physical harm or 

death of affected organisms through 

exhaustion, starvation, asphyxiation, 

and descaling. Death from impingement 

(‘‘impingement mortality’’) can occur 

immediately or subsequently as an 

individual succumbs to physical 

damage upon its return to the 

waterbody. 

Entrainment occurs when organisms 

are drawn through the cooling water 

intake structure into the cooling system. 

68462 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

7EPA 1999. Detailed Industry Questionnaires: 

Phase II Cooling Water Intake Structures & 

Watershed Case Study Short Questionnaire. U.S. 

Environmental Protection Agency, Office of 

Wastewater Management, Washington, DC. OMB 

Control No. 2040–0213. 

8EPA 2003. Industry Technical Questionnaire: 

Phase III Cooling Water Intake Structures. Offshore 

and Coastal Oil and Gas Extraction Facilities. U.S. 

Environmental Protection Agency, Office of Science 

and Technology, Washington DC. OMB Control No. 

2030–0213.

9For more information, please see Chapter A2 of 

Part A of the Regional Analysis Document.

10Summers, J.K. 1989. Simulating the indirect 

effects of power plant entrainment losses on an 

estuarine ecosystem. Ecological Modeling, 49: 31–

47.

11For more information, please see Chapter A9 of 

Part A of the Regional Analysis Document.

12 Impingement and entrainment data were 

obtained from the 2000 Draft Habitat Conservation 

Plan for the Pittsburg and Contra Costa facilities. 

Please see EPA’s Regional Studies for the Final 

Section 316(b) Phase II Existing Facilities Rule for 

detailed information on EPA’s evaluation of 

impingement and entrainment at these facilities.

13Florida Power and Light Company. 1995. 

Assessment of the impacts at the St. Lucie Nuclear 

Generating Plant on sea turtle species found in the 

inshore waters of Florida.

14Florida Power and Light Company. 2002. 

Florida Power & Light Company St. Lucie Plant 

Annual Environmental Operating Report 2002.

Organisms that become entrained are 

typically relatively small, aquatic 

organisms, including early life stages of 

fish and shellfish. Many of these small 

fragile organisms serve as prey for larger 

organisms higher on the food chain 

which are commercially and 

recreationally desirable species. As 

entrained organisms pass through a 

facility’s cooling system they may be 

subject to mechanical, thermal, and at 

times, chemical stress. Sources of such 

stress include physical impacts in the 

pumps and condenser tubing, pressure 

changes caused by diversion of the 

cooling water into the plant or by the 

hydraulic effects of the condensers, 

sheer stress, thermal shock in the 

condenser and discharge tunnel, and 

chemical toxic effects from antifouling 

agents such as chlorine. Similar to 

impingement mortality, death from 

entrainment can occur immediately or 

subsequently as the individual 

succumbs to the damage from the 

stresses encountered as it passed 

through the cooling water system once 

it is discharged back into the waterbody.

EPA estimates that existing Phase III 

facilities withdraw, on average, 

approximately 23,000 million gallons a 

day from waters of the United States.7 8

The withdrawal of such large quantities 

of water has the potential to affect large 

quantities of aquatic organisms 

including phytoplankton (tiny, 

freefloating photosynthetic organisms 

suspended in the water column), 

zooplankton (small aquatic animals, 

including fish eggs and larvae, that may 

consume phytoplankton and other 

zooplankton), fish, and shellfish. 

Aquatic organisms drawn into cooling 

water intake structures are either 

impinged on components of the cooling 

water intake structure or entrained in 

the cooling water system itself. Other 

organisms, including reptiles, birds, and 

mammals are also sometimes drawn 

into cooling water intake structures.

The environmental impacts 

attributable to impingement mortality 

and entrainment at individual facilities 

include losses of early life stages of fish 

and shellfish, reductions in forage 

species, and decreased recreational and 

commercial fishery landings. EPA 

estimates that cooling water intake 

structures potentially within the scope 

of today’s rule and with a cooling water 

intake designed to take in greater than 

2 MGD of water kill more than 120 

million age 1 equivalent fish annually 

through impingement and entrainment. 

Expressing impingement mortality and 

entrainment losses as age 1 equivalents 

is an accepted method for converting 

losses of all life stages into individuals 

of an equivalent age and provides a 

standard metric for comparing losses 

among species, years, and facilities. 

Although the number of age 1 

equivalent fish killed by impingement 

and entrainment is large, precise 

quantification of the nature and extent 

of impacts to populations and 

ecosystems is difficult due in part to the 

complexity of population dynamics and 

the physical, chemical, and biological 

processes of ecosystems. While it is 

generally accepted as a simple and 

transparent method for modeling losses, 

the proportional methodology that EPA 

uses to estimate impingement mortality 

and entrainment nationwide involves 

uncertainties that may result in under or 

over estimating actual impingement 

mortality and entrainment rates.9

Decreased numbers of aquatic 

organisms can disrupt aquatic food 

webs and alter species composition and 

overall levels of biodiversity. For 

example, a model that examined the 

effect of large entrainment losses of 

forage fish, such as bay anchovy, 

predicted subsequent reductions in 

predator populations (including 

commercially and recreationally 

important species such as striped bass, 

weakfish, and blue fish) as high as 25 

percent.10 This is because forage 

species, which comprise a majority of 

entrainment losses at many facilities, 

are often a primary food source for 

predator species.

EPA is also concerned about the 

potential impacts of cooling water 

intake structures located in or near 

habitat areas that support threatened, 

endangered, or other species of concern 

(those species that might be in need of 

conservation actions, but are not 

currently listed as threatened or 

endangered under State or Federal 

law).11 In the San Francisco Bay-Delta 

Estuary, California, in the vicinity of the 

Pittsburg and Contra Costa Power Plants 

several fish species (e.g., Delta smelt, 

Sacramento splittail, chinook salmon, 

and steelhead) are now considered 

threatened or endangered by State and/

or Federal authorities. EPA evaluated 

facility data on impingement mortality 

and entrainment rates for these species 

and estimated that potential losses of 

special status fish species at the two 

facilities may average 8,386 age 1 

equivalents per year resulting from 

impingement and 169 age 1 equivalents 

per year due to entrainment.12 In 

another example, EPA is aware that 

from 1976 to 1994, approximately 3,200 

threatened or endangered sea turtles 

entered enclosed cooling water intake 

canals at the St. Lucie Nuclear 

Generating Plant in Florida.13 The 

facility developed a capture-and-release 

program in response to these events. 

Most of the entrapped turtles were 

captured and released alive; however, 

approximately 160 turtles did not 

survive. An incidental take limit 

established by NOAA Fisheries in a 

2001 biological opinion for this facility 

has been set at no more than 1,000 sea 

turtles captured in the intake, with less 

than one percent killed or injured as a 

result of plant operations.14 Although 

the extent to which threatened, 

endangered, and other special status 

species are taken by cooling water 

intake structures more generally is yet to 

be determined, EPA is concerned about 

potential impacts to such species.

EPA is addressing the universe of 

existing facilities through two separate 

rulemakings. The Phase II final rule 

addressed power generation facilities 

with cooling water intake structures 

designed to take in water flows greater 

than or equal to 50 million gallons a day 

(MGD). For today’s proposed 

rulemaking, EPA evaluated impacts 

from the remaining power generation 

facilities (those with cooling water 

intake structures designed to withdraw 

greater than 2 MGD and less than 50 

MGD) and from manufacturing facilities 

withdrawing greater than 2 MGD. EPA 

divided the universe of existing 

facilities in this way in part because 

EPA initially had limited data on Phase 

III facilities with design capacities less 

than 50 MGD. Dividing the universe of 

existing facilities provided EPA with an 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68463

15EPA 1999. Detailed Industry Questionnaires: 

Phase II Cooling Water Intake Structures & 

Watershed Case Study Short Questionnaire. U.S. 

Environmental Protection Agency, Office of 

Wastewater Management, Washington, DC. OMB 

Control No. 2040–0213.

opportunity to gather more information 

on Phase III facilities. 

Though the magnitude of impacts 

EPA has quantified from the universe of 

Phase III facilities is substantially 

smaller than the magnitude of impacts 

EPA has quantified from the universe of 

Phase II facilities, the information EPA 

has gathered on individual Phase III 

facilities indicates that the types of 

impacts that large individual facilities 

have on aquatic organisms can be 

similar to individual Phase II facilities’

impacts.15 Like Phase II facilities, Phase 

III facilities withdraw water from all 

waterbody types: lake, reservoir, Great 

Lake, freshwater river and stream, tidal 

river, estuary, and ocean environments. 

A smaller percentage of the overall 

cooling water flow withdrawn by Phase 

III facilities comes from tidal river, 

estuary and ocean environments, 

however, which are some of the most 

sensitive waterbodies. Phase III facilities 

also reside in many of the same 

geographic areas of the country and on 

many of the same waterbodies as Phase 

II facilities.

Information available to the Agency 

also indicates that the range of 

configurations of Phase III cooling water 

intake structures is similar to that of 

Phase II intakes (see section VI), and 

that their size ranges broadly overlap (in 

terms of both design capacity and actual 

intake flow). The majority of facilities 

evaluated as part of the Phase III 

rulemaking, have cooling water intake 

structures designed to take in less than 

50 MGD. However, the majority of total 

cooling water intake volume at Phase III 

facilities is associated with facilities 

designed to withdraw 50 MGD or more. 

The ten largest Phase III facilities have 

intakes designed to take in more than 

500 MGD. Two of these facilities have 

cooling water intakes designed to take 

in more than 1,000 MGD. In Phase II, 

there were 257 facilities with cooling 

water intakes designed to take in more 

than 500 MGD and 112 cooling water 

intakes designed to take in more than 

1,000 MGD.

The universe of Phase III facilities 

also differs from that of Phase II 

facilities in that it includes oil and gas 

extraction facilities operating in offshore 

marine environments. EPA knows of no 

studies that examine actual 

impingement mortality and entrainment 

by offshore oil and gas extraction 

facilities. However, offshore marine 

environments provide habitat for a 

number of species of fish, shellfish, and 

other aquatic organisms. Many species 

have life stages that are small and 

planktonic or of minimal swimming 

ability and are therefore vulnerable to 

entrainment by cooling water intake 

structures. Larger life stages are 

potentially vulnerable to impingement. 

Both types of organisms are found in the 

offshore marine environment and thus 

may be susceptible to impingement 

mortality and entrainment by offshore 

oil and gas extraction facilities. The 

densities of organisms in the vicinity of 

these facilities relative to densities in 

estuaries and other nearshore areas is 

not well characterized. 

Offshore oil and gas extraction 

facilities have also been shown to attract 

and concentrate aquatic organisms in 

the immediate vicinity of the 

underwater portions of their structure. 

A variety of species of pelagic fish have 

been found to gather within relatively 

short time frames around the 

underwater portion of offshore oil and 

gas extraction facilities. If a facility 

remains in one place for a sufficient 

length of time, other species of aquatic 

organisms take up residence directly 

upon the underwater structure and form 

reef-like communities that support 

additional species of fish and shellfish. 

The increased number of organisms near 

the underwater portion of facilities 

where cooling water intake structures 

are located increases the potential for 

impingement mortality and entrainment 

of those organisms. The extent to which 

the increased numbers of aquatic 

organisms represents an overall increase 

in organism populations, rather than a 

simple concentration of organisms from 

surrounding areas, is not known. (For 

additional information, see DCN 7–

0013.) 

The Minerals Management Service 

(MMS) did attempt to estimate potential 

population level impacts from 

impingement mortality and entrainment 

associated with the future operation of 

the Liberty Island project located in the 

Beaufort Sea in Alaska. The final 

Environmental Impact Statement for the 

project states that the proposed seawater 

intake structure will likely harm or kill 

some young-of-the-year arctic cisco 

during the summer migration period 

and some eggs and fry of other species 

living in the immediate vicinity of the 

intake. MMS estimated that less than 

1% of all arctic cisco in the Liberty 

Island area were likely to be harmed or 

killed by the intake structure and that 

there would not be a measurable effect 

on the young-of-the-year cisco in the 

migration corridor. However, MMS also 

did not expect measurable effects on 

populations of other fish species, 

including salmon, because of the 

widespread and low density 

distribution of those species’ eggs and 

fry. Essential fish habitat for salmon will 

be adversely affected according to MMS 

because it is expected that prey species 

of zooplankton and fish in their early 

life stages (juveniles, eggs, and larvae) 

could be killed in the intake (see

Section A of the Regional Study report). 

EPA’s analyses indicate that, on a 

national basis, Phase II existing facilities 

have a total actual cooling water intake 

flow (214,000 million gallons a day) 

greater than that of Phase III existing 

facilities (23,000 million gallons a day). 

As discussed in the preamble to the 

Phase II final rule (69 FR 41612), 

information in the record contains 

evidence to support the proposition 

that, in a given aquatic environment, 

entrainment is related to flow (see DCN 

2–013L–R15 and 2–013) while 

impingement is related to a combination 

of flow, intake velocity, and fish swim 

speed (see DCN 2–029). Larger 

withdrawals of water may result in 

commensurately greater levels of 

entrainment because the eggs and larvae 

of some aquatic species are free-floating 

and may be drawn with the flow of 

cooling water into an intake structure. 

Impingement rates are also influenced 

by swim speeds of affected species and 

intake velocity. As described in section 

IX, the Agency estimates that 120 

million age 1 equivalent fish are 

impinged and entrained annually by the 

universe of Phase III facilities. This 

number is lower than the 3.4 billion age 

1 equivalent fish the Agency estimated 

to be impinged and entrained annually 

by Phase II facilities (69 FR 41656). The 

lower total flow partially explains why 

the impacts EPA quantified for Phase III 

facilities are lower than those EPA 

quantified for Phase II facilities. In 

addition, based on the studies EPA was 

able to collect from Phase II and Phase 

III facilities, even on a flow-weighted 

basis the number of organisms impinged 

and entrained by Phase III facilities is 

approximately one third of the number 

of organisms impinged and entrained by 

Phase II facilities. 

The following discussion refers to 

studies from Phase II facilities which 

have been extensively studied in order 

to illustrate environmental impacts 

associated with cooling water intake 

structures. Because of the basic 

similarities in nature among Phase II 

and Phase III facilities, the Agency 

believes these case studies are useful for 

understanding the types of 

environmental impacts that may result 

from cooling water intake structures at 

Phase III facilities. EPA notes that Phase 

II facilities as a group withdraw more 

68464 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

16Boreman J. and P. Goodyear. 1988. Estimates of 

entrainment mortality for striped bass and other 

fish species inhabiting the Hudson River Estuary. 

American Fisheries Society Monograph 4:152–160.

17New York State Department of Environmental 

Conservation (NYSDEC). 2000. Internal 

memorandum provided to the U.S. EPA on NYDECs 

position on SPDES permit renewals for Roseton, 

Bowline Point 1 & 2, and Indian Point 2 & 3 

generating stations.

18New York State Department of Environmental 

Conservation (NYSDEC). 2003. Final Environmental 

Impact Statement: Concerning the Applications to 

Renew NYSPDES Permits for the Roseton 1 & 2, 

Bowling 1 & 2 and Indian Point 2 & 3 Steam Electric 

Generating Stations, Orange, Rockland and 

Westchester Counties.

19 Ibid. 20Henderson, P.A. and R.M. Seaby. 2000. 

Technical comments on the Draft Environmental 

Impact Statement for the State Pollution Discharge 

Elimination System Permit Renewal for Bowline 

Point 1 & 2, Indian Point 2 & 3, and Roseton 1 & 

2 Steam Generating Stations. Pisces Conservation 

Ltd. 21 Ibid. 22New York State Department of Environmental 

Conservation (NYSDEC). 2003. Final Environmental 

Impact Statement: Concerning the Applications to 

Renew NYSPDES Permits for the Roseton 1 & 2, 

Bowling 1 & 2 and Indian Point 2 & 3 Steam Electric 

Generating Stations, Orange, Rockland and 

Westchester Counties.

23Brayton Point Station, Somerset, MA. Final 

National Pollutant Discharge Elimination System 

(NPDES) Permit: Fact Sheet. October 2003.

24 Ibid. 

25 Gibson, M. 1995 (revised 1996). Comparison of 

trends in the finfish assemblages of Mt. Hope Bay 

and Narragansett Bay in relation to operations fo the 

New England Power Brayton Point station. Rhode 

Island Division of Fish and Wildlife, Marine 

Fisheries Office.

26EPA-New England. 2002. Clean Water Act 

NPDES Permitting Determinations for Thermal 

Discharge and Cooling Water Intake from Brayton 

Point Station in Somerset, MA (NPDES Permit No. 

MA 0003654), July 22, 2002.

27Murdoch, W.W., R.C. Fay, and B.J. Mechalas. 

1989. Final Report of the Marine Review Committee 

to the California Coastal Commission. August 1989, 

MRC Document No. 89–02.

cooling water than the Phase III 

facilities as a group and requests 

comment on the relevance of these 

Phase II facility studies for the Phase III 

rulemaking. EPA also requests any case 

studies or other available data on 

environmental impacts from Phase III 

facilities.

Examples of Environmental Impacts 

Caused by Phase II Cooling Water Intake 

Structures 

1. Hudson River 

The power generation facilities on the 

Hudson River in New York are some of 

the most extensively studied in the 

nation. The fish populations in the 

Hudson River have also been studied 

extensively to measure the impacts of 

these power plants. Studies of 

entrainment at five Hudson River power 

plants during the 1980s predicted yearclass reductions ranging from six 

percent to 79 percent, depending on the 

fish species.16 The combined design 

intake flow capacity of these five 

facilities is greater than 6,500 million 

gallons per day. The New York State 

Department of Environmental 

Conservation (NYSDEC) concluded that 

any ‘‘compensatory responses to this 

level of power plant mortality could 

seriously deplete any resilience or 

compensatory capacity of the species 

needed to survive unfavorable 

environmental conditions.’’17

The Final Environmental Impact 

Statement (FEIS) prepared for these 

three of these five facilities concludes 

that impacts are associated with the 

power plants and notes that these 

impacts are more like habitat 

degradation than the ‘‘selective 

cropping’’ of fish that occurs during 

regulated fishing because the entire 

community is impacted rather than 

specific species higher on the food 

chain.18 The FEIS estimates, from 

samples collected between 1981 and 

1987, that the average annual 

entrainment losses from these three 

facilities includes 16.9 million 

American shad, 303.4 million striped 

bass, 409.6 million bay anchovy, 468 

million white perch, and 826.2 million 

river herring.19 In addition, related 

studies have found a small long-term 

decline in both species richness and 

diversity within the resident fish 

community.20

The Hudson River, like many 

waterbodies in the nation, has 

undergone many changes in the past 

few decades. These changes, which 

have affected fish populations either 

positively or negatively, include 

improvements to water quality as a 

result of upgrades to sewage treatment 

plants, invasions by exotic species such 

as zebra mussels, chemical 

contamination by toxins such as PCBs 

and heavy metals, global climate shifts 

such as increases in annual mean 

temperatures and higher frequencies of 

extreme weather events (e.g., the El 

Nin ̃ o-Southern Oscillation), and strict 

management of individual species 

stocks such as striped bass.21 In 

addition, there are dramatic natural 

changes in fish populations on an 

annual basis and in the long term due 

to natural phenomena because the 

Hudson River, like many waterbodies, is 

a dynamic system with many 

fundamental, fluctuating environmental 

parameters-such as flow, temperature, 

salinity, dissolved oxygen, nutrients, 

and disease-that cause natural variation 

in fish populations each year.22 The 

existence of these interacting variables 

makes it difficult to determine the 

impact of impingement and entrainment 

losses on a population’s relative health. 

Nonetheless, as described later in this 

section, EPA is concerned about the 

potential for cumulative impacts 

resulting from multiple facility intakes 

that collectively impinge and/or entrain 

aquatic organisms within a specific 

waterbody.

2. Mount Hope Bay 

Environmental impacts were also 

studied in another recent permit 

reissuance for the Brayton Point Station 

in Somerset, Massachusetts, where EPA 

is the permitting authority. EPA 

determined that, among other things, 

the facility’s cooling water system had 

contributed to the collapse of the fishery 

and inhibited its recovery despite 

stricter commercial and recreational 

fishing limits and improved water 

quality due to sewage treatment 

upgrades. The facility currently 

withdraws nearly one billion gallons of 

water each day (1,000 MGD) and the 

average annual losses of aquatic 

organisms due to impingement and 

entrainment are estimated in the 

billions, including, among other species, 

251 million winter flounder, 375 

million windowpane flounder, 3.5 

billion tautog and 11.8 billion bay 

anchovy.23 A dramatic change in the 

fish populations in Mount Hope Bay is 

apparent after 1984 with finfish 

abundance decline by more than 87 

percent, which coincides with a 45 

percent increase in cooling water 

withdrawal from the bay due to the 

modification of Unit 4 from a closedcycle recirculating system to a oncethrough cooling water system and a 

similar increase in the facility’s thermal 

discharge.24 25 The relative contributions 

of cooling water withdrawal and 

increased thermal discharge to the 

observed population decline is not 

known, and some of decline may be due 

to factors other than cooling water. 

However, the downward trend of 

several species of finfish abundance in 

Mount Hope Bay is significantly greater 

than declines for the same species in 

adjacent Narragansett Bay that is not 

influenced by the operation of Brayton 

Point Station.26 Despite fishing 

restrictions, fish stocks have not 

recovered.

3. Southern California Bight 

At the San Onofre Nuclear Generating 

Station (SONGS) (3,300 MGD design 

intake capacity), in a normal (non-El 

Nin ̃ o) year, an estimated 57 tons of fish 

were killed per year when all units were 

in operation.27 The amount lost per year 

included approximately 350,000 

juveniles of white croaker, a popular 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68465

28Tondreau, R., J. Hey and E. Shane, Morningside 

College. 1982. Missouri River Aquatic Ecology 

Studies: Ten Year Summary (1972—1982). Prepared 

for Iowa Public Service Company, Sioux City, Iowa.

29Schmitt, R.J. and C.W. Osenberg. 1996. 

Detecting Ecological Impacts. Academic Press, San 

Diego, CA. 

30EPRI 1999. Catalog of Assessment Methods for 

Evaluating the Effects of Power Plant Operations on 

Aquatic Communities. TR–112013, EPRI, Palo Alto, 

CA.

31Hutson, S.S., N.L. Barber, J.F. Kenny, K.S. 

Linsey, D.S. Lumia, and M.A. Maupin. 2004. 

Estimated Use of Water in the United States in 

2000. U.S. Geological Survey Circular 1268.

sport fish; this number represents 

33,000 adult equivalents or 3.5 tons of 

adult fish. In shallow water, densities of 

queenfish and white croaker decreased 

60 percent within one kilometer of 

SONGS and 35 percent within three 

kilometers from SONGS as compared to 

densities prior to facility operations. 

Densities of local midwater fish 

decreased 50 to 70 percent within three 

kilometers of the facility. In contrast, 

relative abundances of some bottomdwelling species in the same areas were 

higher because of the enriched nature of 

the SONGS discharge, which in turn 

supported elevated numbers of prey 

items for bottom-dwelling fish.

4. Missouri River 

Facilities sited on waterbodies 

previously impaired by anthropogenic 

activities such as channelization can 

demonstrate the potential for reduced 

entrainment and impingement losses 

associated with cooling water intake 

structures. The Neal Generating 

Complex facility, located near Sioux 

City, Iowa, on the Missouri River is 

coal-fired and utilizes once-through 

cooling systems. According to a ten year 

study conducted from 1972–82, the 

Missouri River aquatic environment 

near the Neal complex was previously 

heavily impacted by channelization and 

very high flow rates meant to enhance 

barge traffic and navigation.28 These 

anthropogenic changes to the natural 

river system resulted in significant 

losses of fish habitat. At this facility, 

there was found to be little 

impingement mortality and entrainment 

by cooling water intake structures.

Studies like those described in this 

section provide only a partial picture of 

the range of environmental impacts 

associated with cooling water intake 

structures. Although numerous studies 

were conducted to determine the 

environmental impacts caused by 

impingement mortality and entrainment 

at existing facilities, many of them are 

based on limited data that were 

collected more than 25 years ago. EPA’s 

review of available facility impingement 

and entrainment studies identified a 

substantial number of serious study 

design limitations, including data 

collections for only one to two years or 

limited to one season or for a subset of 

the affected species; limited taxonomic 

detail (i.e., egg and larval losses not 

identified to the species level); a general 

lack of statistical information such as 

inclusion of variance measures for 

impingement and entrainment 

estimates; and the lack of standard 

methods and metrics for quantifying 

impingement mortality and 

entrainment, which limits the potential 

for comparing impacts among species, 

years, sites, and technologies and for 

evaluating cumulative impacts across 

multiple facilities. Further, in many 

cases it is likely that facility operating 

conditions and/or the state of the 

waterbody itself has changed since these 

studies were conducted. Finally, the 

methods for monitoring impingement 

and entrainment used in the 1970s and 

1980s, when most section 316(b) 

evaluations were performed, were often 

inconsistent or incomplete, making 

quantification of impacts difficult. 

Recent advances in environmental 

assessment techniques provide new 

and, in some cases, better tools for 

monitoring impingement and 

entrainment and quantifying the current 

magnitude of the impacts.29 30 It is 

difficult to predict the effects of these 

study limitations on the impacts 

estimates, specifically whether they 

have led to an overestimate or 

underestimate of impacts. The studies 

do show, however, that the nature and 

magnitude of impacts are highly case 

specific.

EPA is also concerned about the 

potential for cumulative impacts related 

to cooling water withdrawal. 

Cumulative impacts may result from: (1) 

Multiple facility intakes impinging and/

or entraining aquatic organisms within 

a specific waterbody, watershed, or 

along the migratory pathway of specific 

species; (2) the existence of multiple 

stressors within a waterbody/watershed, 

including cooling water intake 

structures withdrawals; and (3) 

repeated, long-term occurrences of 

impingement and/or entrainment losses 

that may result in the diminishment of 

the compensatory reserve of a particular 

fishery stock. 

Historically, environmental impacts 

related to cooling water intake 

structures have been evaluated on a 

facility-by-facility basis. These historical 

evaluations do not consider the 

potential for a fish or shellfish species 

to be concomitantly impacted by 

cooling water intake structures 

belonging to other facilities that are 

located within the same waterbody or 

watershed in which the species resides 

or along the coastal migratory route of 

a particular species. Based on EPA’s 

estimation of national impacts from 

Phase II and Phase III facilities, Phase II 

facilities would contribute a greater 

level of stress to a national measurement 

of cumulative stress than would the 

universe of Phase III facilities. However, 

the potential cumulative effects on a 

species or ecosystem of multiple intakes 

located within a specific waterbody or 

along a coastal segment are difficult to 

quantify and are not typically assessed. 

Thus, EPA is concerned that this type of 

cumulative impact is largely unknown 

and has not adequately been accounted 

for in evaluating impacts. 

A total of 408,000 million gallons of 

water per day were withdrawn from 

waters of the United States in 2000 for 

cooling, irrigation, manufacturing 

processes, drinking, livestock watering 

and other purposes,31 of which cooling 

water intake from Phase III facilities 

constitutes 23,000 million gallons of 

water per day, or approximately 6% of 

total water withdrawal. Additional 

stresses on aquatic systems include, but 

are not limited to, nutrient, toxics, and 

sediment loadings; low dissolved 

oxygen; habitat loss; and stormwater 

runoff. Although EPA recognizes that a 

nexus between a particular stressor and 

adverse environmental impact may be 

difficult to establish with certainty, EPA 

believes stressors that cause or 

contribute to the loss of aquatic 

organisms and habitat, such as those 

described above, may incrementally 

impact the health and long-term 

viability of aquatic resources. EPA 

analyses suggest that over 99 percent of 

all existing facilities with cooling water 

withdrawals that EPA surveyed in its 

section 316(b) survey of existing 

facilities are located within two miles of 

waters that are identified as impaired by 

a State or Tribe (see 66 FR 65256, 

65297). Thus, the Agency is concerned 

that to the extent that many of the 

aquatic organisms subject to the effects 

of cooling water withdrawals reside in 

impaired waterbodies, they are 

potentially more vulnerable to 

cumulative impacts from an array of 

physical and chemical anthropogenic 

stressors.

Finally, EPA believes that an aquatic 

population’s potential compensatory 

ability—the capacity for a species to 

increase its survival, growth, or 

reproduction in response to reductions 

sustained to its overall population 

size—may be compromised by 

impingement and entrainment losses in 

68466 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

32Hutchings, J.A. and R.A. Myers. 1994. What can 

be learned from the collapse of a renewable 

resource? Atlantic cod, Gadus morhus, of New 

Foundland and Labrador. Canadian Journal of 

Fisheries and Aquatic Sciences 51:2126–2146.

33 Goodyear, C.P. 1977. Assessing the impact of 

power plant mortality on the compensatory reserve 

of fish populations. Pages 186–195 in W. Van 

Winkle, ed., Proceedings of the Conference on 

Assessing the Effects of Power Plant Induced 

Mortality on Fish Populations. Pergamon Press, 

New York, NY.

34Myers, R.A., N.J. Barrowman, J.A. Hutchings, 

and A.A. Rosenburg. 1995. Population dynamics of 

exploited fish stocks at low population levels. 

Science 26:1106–1108. 

35Hutchings, J.A. and R.A. Myers. 1994. What can 

be learned from the collapse of a renewable 

resource? Atlantic cod, Gadus morhus, of New 

Foundland and Labrador. Canadian Journal of 

Fisheries and Aquatic Sciences 51:2126–2146. 

36Liermann, M. and R. Hilborn. 1997. 

Depensation in fish stocks: A hierarchic Bayesian 

metaanalysis. Can. J. Fish. Aquatic. Sci. 54:1976–

1985.

conjunction with all the other stressors 

encountered within a population’s 

natural range, as well as impingement 

and entrainment losses occurring 

consistently over extended periods of 

time. As discussed in the Phase I new 

facility rule (see 66 FR 65294), EPA is 

concerned that even if there is 

uncertainty about the extent to which 

cooling water intake structures alone 

reduce a population’s compensatory 

reserve, this stressor, in combination 

with the multitude of other stressors 

acting upon a species, can potentially 

adversely affect population 

sustainability.32 Moreover, EPA notes 

that the opposite effect or 

‘‘depensation’’ (decreases in recruitment 

as stock size declines) 33 may occur if a 

population’s size is reduced beyond a 

critical threshold. Depensation can lead 

to further decreases in population 

abundances that are already seriously 

depleted and, in some cases, recovery of 

the population may not be possible even 

if the stressors are removed.34 35 36

In conclusion, EPA believes that there 

are multiple types of undesirable and 

unacceptable environmental impacts 

that may be associated with Phase III 

facilities, depending on conditions at 

the individual site. EPA solicits 

comment and additional data 

characterizing the type and extent of 

these impacts.

VI. Basis for the Proposed 

Requirements 

A. What Is the Best Technology 

Available for Minimizing Adverse 

Environmental Impact at Phase III 

Existing Facilities? 

Under today’s proposed rule, existing 

Phase III facilities would be subject to 

the same national performance 

standards as Phase II existing facilities, 

and would be authorized to meet these 

requirements through the same five 

compliance alternatives provided in the 

Phase II rule. EPA is proposing to codify 

Phase III requirements in 40 CFR 125, 

subpart K. See section II for a discussion 

of the three co-proposed thresholds that 

in part determine which facilities would 

constitute a Phase III existing facility. 

Requirements for facilities that have, or 

are required to have, an NPDES permit 

and withdraw cooling water from waters 

of the United States, but do not meet the 

applicable flow threshold of today’s 

proposed rule, or use less than 25 

percent of the water withdrawn 

exclusively for cooling purposes, would 

continue to be established by permit 

writers on a case-by-case, best 

professional judgment basis. Today’s 

proposed rule also would establish 

requirements for new offshore oil and 

gas extraction facilities. See section 

VI.A.5 for a discussion of proposed 

requirements for new offshore oil and 

gas extraction facilities. As with EPA’s 

Phase I and II rules, States and 

authorized Tribes retain the authority to 

impose additional requirements as 

authorized by their laws and 

regulations. 

EPA is proposing national 

performance standards for the reduction 

of impingement mortality and, when 

appropriate, entrainment. EPA 

developed these proposed performance 

standards in part based on a variety of 

technologies, but the proposed rule 

would not mandate the use of any 

specific technology. Rather, the 

proposed performance standards consist 

of ranges of reductions in impingement 

mortality and/or entrainment (e.g.,

reduce impingement mortality by 80 to 

95 percent and/or entrainment by 60 to 

90 percent) based on the effectiveness of 

commercially available, economically 

practicable technologies operating in a 

range of aquatic environments. These 

proposed performance standards reflect 

the best technology available for 

minimizing adverse environmental 

impact determined on a national 

categorical basis. The type of 

performance standard applicable to a 

particular facility (i.e., reductions in 

impingement mortality only or 

reductions in both impingement 

mortality and entrainment) would vary 

by the source waterbody type (i.e.,

freshwater river/stream, estuary/tidal 

river, ocean, Great Lake, or lake/

reservoir) and the proportion of the 

waterbody withdrawn. 

Under this proposal, a Phase III 

existing facility could select among the 

same compliance alternatives available 

under the Phase II rule: (1) Demonstrate 

that it has reduced or will reduce its 

cooling water intake flow commensurate 

with a closed-cycle recirculating system, 

or that it has reduced, or will reduce, 

the maximum through-screen design 

intake velocity to 0.5 feet per second or 

less (the through-screen design intake 

velocity criteria meets the performance 

standards to reduce impingement 

mortality only; the facility may still be 

subject to performance standards for 

entrainment); (2) demonstrate that its 

existing design and construction 

technologies, operational measures, 

and/or restoration measures meet the 

applicable performance standards and 

restoration requirements; (3) 

demonstrate that it has selected design 

and construction technologies, 

operational measures, and/or restoration 

measures that will, in combination with 

any existing design and construction 

technologies, operational measures, 

and/or restoration measures, meet the 

applicable performance standards and 

restoration requirements; (4) 

demonstrate that it will install or has 

installed and properly operates and 

maintains an approved design and 

construction technology; or (5) 

demonstrate that it has selected, 

installed, and is properly operating and 

maintaining, or will install and properly 

operate and maintain, design and 

construction technologies, operational 

measures, and/or restoration measures 

that the Director has determined to be 

the best technology available for the 

facility based on application of a 

specified cost-to-cost test or a cost-tobenefit test. 

EPA is proposing this regulatory 

scheme based on its assessment that 

Phase III existing facilities (existing 

facilities not covered under the Phase II 

rule with a design intake flow that 

meets or exceeds one of the co-proposed 

thresholds) and Phase II facilities 

(existing power producers with a design 

intake flow of 50 MGD or greater) can 

employ similar technologies to 

minimize adverse environmental 

impacts, specifically impingement 

mortality and entrainment. EPA found 

no significant differences in either the 

types of cooling water intake structures 

or types of fish protection technologies 

used by proposed Phase III existing 

facilities and Phase II facilities. 

Moreover, EPA found that these 

technologies are economically 

practicable at the Phase III existing 

facilities proposed for coverage under 

the three proposed options. 

Existing facilities that do not meet one 

of the co-proposed design intake flow 

thresholds (but meet the other 

applicability criteria) would continue to 

be subject to requirements established 

by permit writers on a case-by-case, best 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68467

professional judgment basis, rather than 

to national categorical standards. 

EPA notes that under its current 

regulations at 125.90(b), any existing 

facility that is a point source, that uses 

or proposes to use cooling water intake 

structures to withdraw cooling water 

from waters of the United States, and 

that is not subject to Subpart J or any 

other section 316(b)-related subpart in 

Part 125 must meet the requirements of 

CWA section 316(b) as determined by 

the Director on a case-by-case, best 

professional judgment (BPJ) basis. In 

today’s Notice, EPA is proposing 

national categorical requirements for 

some of the facilities that, under 

§ 125.90(b), would otherwise be subject 

to section 316(b) requirements 

established on a BPJ basis. Those 

facilities outside the scope of today’s 

proposed rule would continue to be 

regulated on a case by case, BPJ basis, 

under Part 125 pursuant to § 125.90(b). 

After considering public comment on 

today’s proposed regulation and any 

additional information developed as 

part of this rulemaking, EPA may decide 

to continue to rely on § 125.90(b) for all 

existing facilities not subject to Subpart 

J or any other section 316(b)-related 

subpart in Part 125 in lieu of today’s 

proposed national categorical 

requirements. 

1. Basis for Proposed Performance 

Standards 

Under today’s proposal, Phase III 

existing facilities would be subject to 

the same performance standards 

promulgated in the final Phase II 

cooling water intake structure rule 

(§ 125.103(b)). The basis for these 

performance standards is discussed in 

detail in the preamble to the final Phase 

II rule (69 FR 41576, July 9, 2004).

Under two of the three options 

proposed today, Phase III existing 

facilities are subject either to 

performance standards to reduce 

impingement mortality only, or 

performance standards to reduce both 

impingement mortality and 

entrainment. EPA believes that 

impingement mortality and entrainment 

are appropriate metrics for performance 

because these are primary and distinct 

types of harmful impacts associated 

with the use of cooling water intake 

structures. 

All Phase III existing facilities 

demonstrating compliance under 

alternatives two, three, and four 

described above (proposed 

§ 125.103(a)(2), (3), and (4)) would be 

subject to performance standards for 

impingement mortality. The 

impingement mortality performance 

standard would require a Phase III 

existing facility that complies under 

§ 125.103(a)(2), (3), and (4)) to reduce 

impingement mortality for all life stages 

of fish and shellfish by 80 to 95 percent 

from the calculation baseline. The 

impingement mortality and entrainment 

performance standards under 

§ 125.103(b) would also be used for 

determining eligibility and site-specific 

requirements for facilities choosing to 

comply under compliance alternative 

five (see proposed § 125.103(b)). 

Both impingement mortality and 

entrainment performance standards 

would apply to Phase III existing 

facilities that withdraw cooling water 

from a tidal river, estuary, ocean, or one 

of the Great Lakes. Under the proposed 

options that would establish a design 

intake flow threshold at 50 MGD or 

higher or 200 MGD or higher, both 

standards would also apply to facilities 

that use cooling water from a freshwater 

river or stream and have a design intake 

flow greater than five percent of the 

mean annual flow. EPA is proposing to 

apply both standards because these 

facilities have the potential to cause 

more significant entrainment impacts. 

The entrainment standard, where 

applicable, would require a Phase III 

existing facility to reduce entrainment 

of all life stages of fish and shellfish by 

60 to 90 percent from the calculation 

baseline. Performance standards for 

entrainment would not apply to Phase 

III existing facilities with design intake 

flows of five percent or less of the mean 

annual flow of a freshwater river or 

stream, and those that withdraw cooling 

water from a reservoir or lake (other 

than one of the Great Lakes). EPA 

believes such facilities have a lower 

propensity for causing significant 

entrainment impacts due to lower 

proportional intake flow or general 

waterbody characteristics. 

Although facilities that withdraw 

from lakes (other than the Great Lakes) 

and reservoirs would not be subject to 

entrainment performance standards, 

they would be subject to other specific 

performance standards under the 50 

MGD or higher proposed option, or 200 

MGD or higher proposed option. If such 

a facility proposes to increase the design 

intake flow of the cooling water intake 

structure, the increase in total design 

intake flow must not disrupt the natural 

thermal stratification or turnover pattern 

of the source water except in cases 

where the disruption does not adversely 

affect the management of fisheries (see 

proposed § 125.103(b)(3)). 

The performance standards applicable 

to Phase III existing facilities are not 

based on a single technology but, rather, 

are based on consideration of a range of 

technologies that EPA has determined to 

be commercially available for the Phase 

III industries affected as a whole and to 

have acceptable non-water quality 

environmental impacts. Because the 

proposed requirements implementing 

section 316(b) would be applied in a 

variety of settings and to Phase III 

existing facilities of different types and 

sizes, no single technology is most 

effective at all such facilities. A range of 

available technologies has therefore 

been used as the basis for the 

performance standards. 

EPA developed the performance 

standards for impingement mortality 

reduction based on an analysis of the 

efficacy of the following technologies: 

(1) Fine and wide-mesh wedgewire 

screens, as well as aquatic filter barrier 

systems, that can reduce mortality from 

impingement by up to 99 percent or 

greater compared with conventional 

once-through systems; (2) barrier nets 

that may achieve reductions of 80 to 90 

percent; and (3) modified screens and 

fish return systems, fish diversion 

systems, and fine mesh traveling screens 

and fish return systems that have 

achieved reductions in impingement 

mortality ranging from 60 to 90 percent 

as compared to conventional oncethrough systems with no impingement 

mortality controls. Data available to EPA 

indicate that these technologies can be 

used to achieve the reductions in 

impingement mortality and/or 

entrainment specified in the 

performance standards. EPA estimates 

that 35 percent of potential Phase III 

existing facilities (i.e. with an intake 

greater than 2 MGD) currently use 

passive intake technology (e.g., 

wedgewire screens, etc.), 12 percent use 

fine mesh screens, 6 percent use fish 

diversion technologies, and 5 percent 

use fish handling technologies. 

Available performance data for 

entrainment reduction are not as 

comprehensive as impingement data. 

However, aquatic filter barrier systems, 

fine mesh wedgewire screens, and fine 

mesh traveling screens with fish return 

systems have been shown to achieve 80 

to 90 percent or greater reduction in 

entrainment compared with 

conventional once-through systems 

without entrainment controls. EPA 

notes that screening to prevent organism 

entrainment may cause impingement of 

those organisms instead.

The performance standards proposed 

at § 125.103(b) are based on the type of 

waterbody in which the intake structure 

is located, the volume of water 

withdrawn by a facility, and the facility 

capacity utilization rate. Under the final 

Phase II rule, EPA grouped waterbodies 

into five categories: (1) Freshwater 

rivers or streams, (2) lakes or reservoirs, 

68468 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

(3) Great Lakes, (4) tidal rivers and 

estuaries, and (5) oceans. This proposal 

would apply these same categories to 

Phase III existing facilities. The Agency 

considers location, one aspect of which 

is waterbody type, to be an important 

factor in addressing adverse 

environmental impact caused by cooling 

water intake structures. Because 

different waterbody types have the 

potential for different adverse 

environmental impacts, the 

requirements to minimize adverse 

environmental impact would vary by 

waterbody type. 

The performance standards for Phase 

III existing facilities with cooling water 

intake structures located in a tidal river 

or estuary are a reduction of 

impingement mortality by 80 to 95 

percent and entrainment by 60 to 90 

percent for fish and shellfish. Data 

available to EPA indicate that estuaries 

and tidal rivers are among the more 

susceptible waterbodies to adverse 

impacts from impingement mortality 

and entrainment. The reproductive 

strategies of tidal river and estuarine 

species, together with other physical 

and biological characteristics of those 

waters, make them more susceptible to 

impacts from cooling water intake 

structures (66 FR 28857–28859; 68 FR 

17140). In contrast, many aquatic 

organisms found in non-tidal freshwater 

rivers and streams are less susceptible to 

entrainment due to their demersal 

(bottom-dwelling) nature and the fact 

that they do not typically have 

planktonic (free-floating) egg and larval 

stages (66 FR 28857; 68 FR 17140). 

Absent entrainment control 

technologies, entrainment at a particular 

site is generally proportional to intake 

flow at that site. EPA believes it is 

reasonable to vary performance 

standards by the potential for adverse 

environmental impact associated with 

flow levels and a waterbody type. Under 

two of the three proposed options, EPA 

would limit the requirement for 

entrainment controls in fresh waters to 

those facilities that withdraw the largest 

proportion of water from freshwater 

rivers or streams because they have a 

greater potential to impinge and entrain 

larger numbers of fish and shellfish. 

EPA is not requiring entrainment 

reductions in freshwater rivers or 

streams where facilities withdraw 5 

percent or less of the source water 

annual mean flow because such 

facilities generally have a lower 

propensity for causing significant 

entrainment impacts due to the lower 

proportion of intake flow in 

combination with the characteristics of 

the waterbody. 

This proposed rule would also 

establish a specific performance 

standard for lakes (other than a Great 

Lake) or reservoirs, in order to protect 

the thermal stratification of the 

waterbody. The natural thermal 

stratification or turnover pattern of a 

lake is a key characteristic that is 

potentially affected by the intake flow 

(which can alter temperature and/or 

mixing of cold and warm water layers) 

and location of cooling water intake 

structures within such waterbodies. The 

Great Lakes are subject to more stringent 

standards than other lakes or reservoirs, 

and must meet performance standards 

for reduction in both impingement 

mortality and entrainment. As described 

in the Phase I proposed rule (65 FR 

49086) and Notice of Data Availability 

(NODA) (66 FR 28858), and the Phase II 

final rule (69 FR 41576), EPA believes 

that the Great Lakes have areas of high 

productivity and sensitive critical 

habitats that would require a greater 

level of protection.

The performance standards for Phase 

III existing facilities with cooling water 

intake structures located in an ocean are 

a reduction of impingement mortality by 

80 to 95 percent and entrainment by 60 

to 90 percent for fish and shellfish. EPA 

is establishing requirements for facilities 

withdrawing from oceans that are 

similar to those for tidal rivers and 

estuaries because the coastal zone of 

oceans (where coastal cooling water 

intake structures withdraw water from) 

are highly productive areas for fish and 

shellfish. (See the Phase I proposed rule 

(65 FR 45060) and documents in the 

record for the Phase I new facility rule 

(Docket W–00–03) such as 2–013A 

through O, 2–019A–R11, 2–019A–R12, 

2–019A–R33, 2–019A–R44, 2–020A, 3–

0059. EPA is also concerned about the 

extent to which fishery stocks that rely 

upon tidal rivers, estuaries and oceans 

for habitat are over utilized and seeks to 

minimize the impact that cooling water 

intake structures may have on these 

species or forage species on which these 

fishery stocks may depend. See 69 FR 

41600. 

As in the Phase I and Phase II rules, 

EPA would apply performance 

standards for minimizing adverse 

environmental impact based on a 

relatively easy to measure and certain 

metric-reduction of impingement 

mortality and entrainment. Although 

adverse environmental impact 

associated with cooling water intake 

structures can extend beyond 

impingement mortality and 

entrainment, EPA is proposing this 

approach because impingement 

mortality and entrainment are primary, 

harmful environmental effects that can 

be reduced through the use of specific 

technologies. In addition, those impacts 

that exist at the population, community, 

and ecosystem levels will also be 

reduced by reducing impingement 

mortality and entrainment. Using 

impingement mortality and entrainment 

as metrics provide certainty about 

performance standards and streamlines 

and thus speeds the issuance of permits. 

The performance standards are 

expressed in the form of ranges rather 

than a single performance benchmark 

because of the uncertainty inherent in 

predicting the efficacy of any one of 

these technologies, or a combination of 

these technologies, across the spectrum 

of facilities operating in a range of 

aquatic environments subject to today’s 

proposed rule. See 69 FR 41600. In 

specifying a range, EPA anticipates that 

facilities will select the most costeffective technologies or operational 

measures to achieve the performance 

level (within the stated range) based on 

conditions found at their site, and that 

Directors will review the facilities’

applications to ensure that appropriate 

alternatives were considered. Proper 

selection, operation, and maintenance of 

these technologies would serve to 

increase potential efficiencies of the 

technologies. EPA also expects that 

some facilities may be able to meet these 

performance requirements by selecting 

and implementing a suite (i.e., more 

than one) of technologies and 

operational measures and/or, as 

discussed in this section, by 

undertaking restoration measures. 

Several additional factors support 

EPA’s expectation that the impingement 

mortality and entrainment reduction 

reflected in the performance standards 

can eventually be achieved by all 

facilities using the design and 

construction technologies on which the 

standards were based. First, a significant 

amount of the data available to EPA 

(e.g., section 316(b) permitting studies) 

were developed during early section 

316(b) permitting and do not reflect 

recent developments or experience 

using these technologies. Second, many 

conventional barrier and return system 

technologies have not been optimized as 

would be encouraged by this rule. 

Finally, some facilities could achieve 

further reductions (estimated at 15–30 

percent) in impingement mortality and 

entrainment by providing for seasonal 

flow restrictions, variable speed pumps, 

and other operational measures and 

innovative flow reduction alternatives 

that can achieve greater reductions. 

The calculation baseline used to 

determine compliance with 

performance standards is defined in 

proposed § 125.102 as an estimate of 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68469

37Reducing the cooling water intake structure’s 

capacity is one of the most effective means of 

reducing entrainment (and impingement mortality). 

For the traditional steam electric utility industry, 

facilities located in freshwater areas that have 

closed-cycle, recirculating cooling water systems 

can, depending on the quality of the make-up water, 

reduce water use by 96 to 98 percent from the 

amount they would use if they had once-through 

cooling water systems. Steam electric generating 

facilities that have closed-cycle, recirculating 

cooling systems using salt water can reduce water 

usage by 70 to 96 percent when make-up and 

blowdown flows are minimized. The lower range of 

water usage would be expected where State water 

quality standards limit chloride to a maximum 

increase of 10 percent over background and 

therefore require a 1.1 cycle of concentration. The 

higher range should be attainable where cycles of 

concentration up to 2.0 are used for the design.

impingement mortality and entrainment 

that would occur at a site assuming: (1) 

The cooling water system had been 

designed as a once-through system; (2) 

the opening of the cooling water intake 

structure is located at, and the face of 

the standard 3⁄8 inch mesh traveling 

screen is oriented parallel to, the 

shoreline near the surface of the source 

waterbody; and (3) the baseline 

practices and procedures are those that 

the facility would maintain in the 

absence of any operational controls, 

including flow or velocity reductions, 

implemented in whole or in part for the 

purposes of reducing impingement 

mortality and entrainment. 

Alternatively, the facility could choose 

to use the current level of impingement 

mortality and entrainment as the 

calculation baseline. The calculation 

baseline could be estimated using: 

historical impingement mortality and 

entrainment data from the facility or 

from another facility with comparable 

design, operational, and environmental 

conditions; current biological data 

collected in the waterbody in the 

vicinity of the facility’s cooling water 

intake structure; or current 

impingement mortality and entrainment 

data collected at the facility. Further, a 

facility could request that the 

calculation baseline be modified to be 

based on a location of the opening of the 

cooling water intake structure at a depth 

other than at or near the surface if it can 

demonstrate to the Director that the 

other depth would correspond to a 

higher baseline level of impingement 

mortality and/or entrainment. EPA is 

proposing to use this definition because 

it represents the most common default 

conditions the Agency could identify to 

give facilities credit for design and 

construction technologies, operational 

measures, and/or restoration measures 

that they have already implemented to 

minimize adverse environmental 

impact, while providing a clear and 

relatively simple definition. In many 

cases, existing technologies at the site 

show some reductions in impingement 

mortality and entrainment when 

compared to this baseline. In such cases, 

impingement mortality and entrainment 

reductions (relative to the calculated 

baseline) achieved by these existing 

technologies should be counted toward 

compliance with the performance 

standards. In addition, operational 

measures such as operation of traveling 

screens that exceed the baseline (e.g., 

screens finer than 3/8 inch mesh, or 

with fish handling capacity), 

employment of more efficient return 

systems, and even location choices 

should be credited for any 

corresponding reduction in 

impingement mortality and 

entrainment. See section VII of this 

preamble for a discussion of how the 

calculation baseline is used to compare 

facility performance with the proposed 

rule’s performance standards. 

In the Phase II final regulations (see

69 FR 41578), EPA considered the rate 

of use of the electric power generation 

facility in setting performance 

requirements. Under the Phase II rule, 

power producing facilities with a 

capacity utilization rate of less than 15 

percent are only required to meet the 

impingement mortality reduction 

requirements, based on EPA’s 

determination that entrainment impacts 

below this threshold would be minimal. 

Today’s proposed rule does not contain 

an analogous provision for 

manufacturing facilities, as EPA has 

been unable to identify a similar 

threshold of operations below which 

impacts would be considered minimal. 

EPA requests comment on the 

availability of such a threshold that 

would result in lesser requirements for 

facilities that do not operate full time, 

thus minimizing burdens to these 

facilities while still protecting the 

source waterbody. 

2. Basis for Five Proposed Compliance 

Alternatives 

Today’s proposed rule would 

authorize a Phase III existing facility 

with a total design intake flow that 

exceeds the specified threshold to 

choose one of five alternatives for 

establishing the best technology 

available for minimizing adverse 

environmental impact at the facility. 

These compliance alternatives 

(proposed § 125.103(a)) would be 

consistent with those promulgated in 

the final Phase II rule (40 CFR 

125.94(a)). Each proposed alternative is 

described below. 

This proposed approach provides a 

high degree of flexibility for Phase III 

existing facilities to select the most 

effective and efficient approach and 

technologies for minimizing adverse 

environmental impact associated with 

their cooling water intake structures. 

This proposed approach also reflects 

EPA’s judgment that, given the wide 

range of various factors that affect the 

environmental impact posed by Phase 

III existing facilities, different 

technologies or different combinations 

of technologies can be used and 

optimized to achieve the performance 

standards. EPA requests comment on all 

aspects of this proposed approach.

a. Meeting Performance Standards 

Through Reducing Intake Flow 

Commensurate With a Closed Cycle 

Recirculating System or Reduced Design 

Intake Velocity 

EPA is proposing that a Phase III 

existing facility could meet applicable 

performance standards through 

complying with § 125.103(a)(1)(i) or (ii). 

Under proposed § 125.103(a)(1)(i), any 

Phase III existing facility that reduces its 

flow to a level commensurate with a 

closed-cycle, recirculating cooling 

system would be deemed to satisfy the 

applicable impingement mortality and 

entrainment performance standards for 

all waterbodies under § 125.103(b). 

Such facilities may still be subject to 

requirements under § 125.103(e). 

Facilities that select this compliance 

alternative either through the use of 

existing closed-cycle recirculating 

system technology at the plant, or by 

retrofitting their facility, would not be 

required to further demonstrate that 

they meet the applicable performance 

standards. 

Available data described in Chapter 3 

of the Phase II Existing Facility 

Technical Development Document 

(DCN 7–0004) suggest that closed-cycle, 

recirculating cooling systems (e.g., 

cooling towers or ponds) can reduce 

mortality from impingement by up to 98 

percent and entrainment by up to 98 

percent when compared with 

conventional once-through systems.37

Although closed-cycle, recirculating 

cooling is not one of the technologies on 

which the performance standards are 

based, use of a closed-cycle, 

recirculating cooling system would 

achieve the performance standards, and 

therefore, facilities that reduce their 

flow commensurate with closed-cycle, 

recirculating cooling systems would be 

deemed to have met the performance 

standards for both impingement 

mortality and entrainment. Under this 

proposal, § 125.103(a)(1)(i) would thus 

constitute a compliance alternative for 

68470 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

38As previously noted, as an example of 

technologies in use EPA estimates that 35 percent 

of Phase III existing facilities currently use passive 

intake technology (e.g., wedgewire screens, etc.), 12 

percent use fine mesh screens, 6 percent use fish 

diversion technologies, and 5 percent use fish 

handling technologies.

Phase III existing facilities based on the 

use of a closed-cycle, recirculating 

cooling system. While EPA based the 

requirements of the Phase I new facility 

rule on the efficacy of closed-cycle 

recirculating systems (66 FR 65273—

65274), EPA has determined that this 

technology is not economically 

practicable for some Phase III existing 

facilities. EPA is nonetheless aware that 

approximately 6 percent of Phase III 

manufacturers with a design intake flow 

of 50 MGD or greater, and 3 percent of 

Phase III manufacturers with a design 

intake flow of 200 MGD or greater, have 

installed this highly effective 

technology and should meet this 

streamlined alternative.

Similarly, under proposed 

§ 125.103(a)(1)(ii), any Phase III existing 

facility that reduces its design intake 

velocity to 0.5 feet per second or less 

would be deemed to have met the 

performance standards for impingement 

mortality and would not be required to 

demonstrate further that it meets the 

performance standards for impingement 

mortality. However, if the facility is 

subject to performance standards for 

entrainment, it would need to otherwise 

demonstrate compliance with 

entrainment performance standards. 

As EPA discussed in the Phase II 

proposed rule at 67 FR 17151 and Phase 

I final rule at 66 FR 65274, intake 

velocity is one of the key factors that 

can affect the impingement of fish and 

other aquatic biota, since in the 

immediate area of the intake it exerts a 

direct physical force against which fish 

and other organisms must act to avoid 

impingement and entrainment. As 

discussed in those notices, EPA 

compiled data from three swim speed 

studies (University of Washington 

study, Turnpenny, and EPRI) (DCN 2–

28A–C) and these data indicated that a 

0.5 feet per second velocity would 

protect at least 96 percent of the tested 

fish. As further discussed, EPA also 

identified Federal documents (Boreman, 

DCN 1–5003–PR; Bell (1990); National 

Marine Fisheries Service (NMFS), 

(1997); an early swim speed and 

endurance study performed by 

Sonnichsen et al. (1973); and fish screen 

velocity criteria that support this 

approach (DCN 2–29). 

b. Meeting Performance Standards 

Through the Use of Design and 

Construction Technologies, Operational 

Measures, and/or Restoration Measures 

Under the second and third proposed 

Phase III compliance alternatives, a 

facility could either demonstrate to the 

Director that the facility’s existing 

design and construction technologies, 

operational measures, and/or restoration 

measures already meet the minimum 

performance standards specified under 

§ 125.103(b) and (c), or that it has 

selected design and construction 

technologies, operational measures, 

and/or restoration measures or some 

combination thereof that will meet these 

performance standards (see proposed 

§ 125.103(a)(2) and (3)). 

Available data indicate that barrier 

and/or fish handling technologies are 

available on a national basis for use by 

Phase III existing facilities.38 These 

technologies exist and are in use at 

various Phase III existing facilities and, 

thus, EPA considers them collectively 

technologically available. Many Phase 

III existing facilities that do not already 

have closed-cycle cooling systems have 

these or other technologies in place that 

reduce impingement mortality or 

entrainment to levels that would meet 

the proposed rule requirements (e.g., 

EPA estimates this is the case for 23 

percent of manufacturers with a design 

intake flow of 50 MGD or greater, see 

the TDD for more details). The fact that 

these technologies are collectively 

utilized means that, in general, one or 

more technologies within the suite 

would be available to each Phase III 

existing facility to meet the applicable 

performance standards. (If this is not the 

case for a specific facility, it can utilize 

compliance alternative five below.)

EPA believes that the design and 

construction technologies necessary to 

meet the requirements are commercially 

available and economically practicable 

for existing facilities, because facilities 

can and have installed many of these 

technologies years after a facility began 

operation. Typically, additional design 

and construction technologies such as 

fine mesh screens, wedgewire screens, 

fish handling and return systems, and 

aquatic filter fabric barrier systems can 

be installed during a scheduled outage 

(operational shutdown).

In addition, EPA’s survey data shows 

that the types of intakes, technologies 

currently employed, or technologies that 

may be retrofitted at proposed Phase III 

existing facilities are no different than 

those at Phase II facilities. For example, 

EPA identified one Phase III facility that 

retrofitted ten 36-inch wedgewire Tscreens. Another retrofit example is an 

electric generator that is below the 

Phase II threshold that replaced its 

perforated plate with wedgewire Tscreens. Examples of Phase II facilities 

that installed these technologies after 

they initially started operating may be 

found at 69 FR 641602. 

c. Meeting Performance Standards 

Through Use of a Pre-Approved Design 

and Construction Technology 

Under the fourth compliance 

alternative in today’s proposed 

regulation, a Phase III existing facility 

would be able to demonstrate that it 

meets specified conditions and has 

installed and properly operates and 

maintains a pre-approved technology 

(see proposed § 125.103(a)(4)). EPA has 

identified one pre-approved technology: 

Submerged cylindrical wedgewire 

screen technology to treat the total 

cooling water intake flow. This preapproved technology was identified in 

the Phase II rule, and is proposed as a 

compliance option for Phase III existing 

facilities (see proposed § 125.108). 

There are five conditions that would 

need to be met in order to use this 

technology to comply with the proposed 

rule: (1) The cooling water intake 

structure is located in a freshwater river 

or stream; (2) the cooling water intake 

structure is situated such that sufficient 

ambient counter currents exist to 

promote cleaning of the screen face; (3) 

the through screen design intake 

velocity is 0.5 feet per second or less; (4) 

the slot size is appropriate for the size 

of eggs, larvae, and juveniles of any fish 

and shellfish to be protected at the site; 

and (5) the entire main cooling water 

flow is directed through the technology 

(small flows totaling less than two MGD 

for auxiliary plant cooling uses are 

excluded). Under this proposal, 

Directors would be explicitly authorized 

under § 125.108 to pre-approve other 

technologies for use at facilities with 

other specified characteristics within 

their respective jurisdiction after 

providing the public with notice and an 

opportunity to comment on the request 

for approval of the technology. The 

Director’s authority to pre-approve other 

technologies would not be limited to 

technologies for use by facilities located 

on freshwater rivers and streams. 

EPA has proposed this compliance 

alternative in response to Phase II 

proposed rule comments and Phase III 

small entity comments (provided 

pursuant to consultations mandated by 

the Small Business Regulatory 

Enforcement Fairness Act) that 

suggested that EPA provide an 

additional, more streamlined 

compliance option that would allow a 

facility to implement certain specified 

technologies that are deemed highly 

protective in exchange for reducing the 

implementation burden, including 

reducing the scope of the 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68471

Comprehensive Demonstration Study. 

(See, 68 FR 13522, 13539; March 19, 

2003 and DCN 7–0006). EPA evaluated 

the effectiveness of specific technologies 

using the impingement mortality and 

entrainment reduction performance 

standards as assessment criteria. The 

approved cylindrical wedgewire screen 

technology has a demonstrated ability to 

reduce impingement mortality by 80 to 

95 percent for fish and shellfish and, if 

required, reduce entrainment by 60 to 

90 percent for any stages of fish and 

shellfish at facilities that meet the 

conditions specified in proposed 

§ 125.108(a)(1). Thus, the technology 

has a demonstrated ability to meet the 

most stringent performance standards 

that would apply to any facility situated 

on a freshwater river or stream. (See

DCN 1–3075, 1–5069, 1–5070, 3–0002, 

and 4–4002B. Also, see DCN 6–5000 

and Chapter 3 of the Phase II Technical 

Development Document (DCN 6–0004)). 

Because cylindrical wedgewire screens 

are believed to be effective when 

deployed under the specified conditions 

and properly maintained, facilities that 

select this compliance option are 

provided substantially streamlined 

requirements for completing the 

Comprehensive Demonstration Study. 

However, facilities that select this 

option would still be required to 

prepare a Technology Installation and 

Operation Plan and a Verification 

Monitoring Plan to monitor the 

effectiveness of the technology at their 

sites in meeting the performance 

standards. 

Referenced below are examples of 

Phase III facilities that installed this 

technology after they initially started 

operating. 

Sherburne County Generating Plant.

A Phase III electric generator, Sherburne 

County is located on the upper 

Mississippi River in Minnesota. The 

facility began operations in 1976 and 

operates one cooling water intake 

structure. The facility also uses a closedcycle, recirculating cooling system. In 

1986, Sherburne County replaced its 

existing intake technology (a perforated 

plate) with cylindrical wedgewire 

screens. 

Tosco Refinery. Oil refineries are one 

of the industry sectors examined in the 

Phase III rule. Located in Rodeo, 

California, the Tosco Refinery replaced 

its traveling screens with cylindrical 

wedgewire screens in 2000.

To date, EPA has not identified new 

data or information that could be used 

to establish other technologies as preapproved on a nationwide basis. Several 

stakeholders suggested EPA continue to 

evaluate whether other technologies 

could qualify as pre-approved 

technologies. EPA solicits comment and 

new data, including appropriate site 

conditions, on other candidate 

technologies for pre-approval. 

d. Site-Specific Determination of Best 

Technology Available To Minimize 

Adverse Environmental Impact 

Under this proposed compliance 

alternative, a Phase III existing facility 

also could comply with the proposed 

rule by seeking a site-specific 

determination of the best technology 

available to minimize adverse 

environmental impact by demonstrating 

to the Director that its cost of complying 

with the applicable performance 

standards would be significantly greater 

than the costs considered by EPA for a 

like facility when establishing such 

performance standards, or that its costs 

would be significantly greater than the 

benefits of complying with such 

performance standards at the facility. 

(See proposed § 125.103(a)(5)(i) and 

(ii)). If a facility satisfies one of the two 

proposed cost tests in § 125.103(a)(5), 

then the Director would have to 

establish site-specific alternative 

requirements based on design and 

construction technologies, operational 

measures, and/or restoration measures 

that achieve an efficacy that is, in the 

judgment of the Director, as close as 

practicable to the applicable 

performance standards without 

resulting in costs that are significantly 

greater than either the costs considered 

by the Administrator in establishing the 

applicable performance standards, or 

the benefits at the facility. 

As discussed in the Phase II rule, in 

developing the proposed standards in 

§ 125.103(b) and the proposed 

compliance alternatives in 

§ 125.103(a)(2)–(4), EPA considered 

several factors, including efficacy, 

availability, ease of implementation, 

indirect effects, the costs that EPA 

expects all existing facilities to incur 

(national costs) and the benefits if all 

existing facilities meet the performance 

standards (national benefits). These 

proposed site-specific compliance 

options would give Phase III existing 

facilities flexibility to demonstrate that 

the best technology available to 

minimize adverse environmental impact 

at their particular sites may be less 

stringent than would otherwise be 

required if the facility selected one of 

the compliance alternatives in 

§ 125.103(a)(2), (3) or (4). 

i. Basis of the Cost-Cost Test 

For a number of related reasons 

discussed below, EPA chose to use a 

comparison of a facility’s actual costs to 

the costs EPA estimated that a like 

facility would incur to meet the national 

performance standards (a ‘‘cost-cost 

test’’) as a basis for obtaining a sitespecific determination of best 

technology available to minimize 

adverse environmental impact. EPA’s 

record for this proposed rule shows that 

for Phase III existing facilities 

withdrawing greater than the three coproposed thresholds, the requirements 

in today’s proposed rule would be 

technically available and generally 

economically practicable. However, 

EPA recognizes that it may not have 

anticipated all site-specific costs that a 

facility would incur, or that the costs for 

retrofitting may significantly exceed 

those EPA considered. For example, 

detailed information on some factors 

important to the effectiveness and costs 

of the technologies, such as debris 

loading and the presence of navigational 

channels within the waterbody at which 

cooling water intakes are sited, were not 

available. Moreover, the information 

EPA used to develop its costs was in 

some cases limited by the fact that, 

while EPA sent surveys to all known 

electric generators and a sample of 

manufacturing facilities covered under 

today’s proposed rule, only 42 percent 

of the total potential Phase II and Phase 

III universes were sent detailed 

questionnaires. The remaining 58 

percent only received a short technical 

questionnaire which requested minimal 

characterization information. Also, EPA 

may not have elicited information 

regarding characteristics of a particular 

facility that, if known, would have 

either significantly changed EPA’s cost 

estimates or demonstrated that none of 

the technologies on which the 

categorical requirements are based are 

economically achievable by the facility. 

Similarly, existing facilities have less 

flexibility than new facilities in 

selecting the location of their intakes 

and technologies for minimizing 

adverse environmental impact, and 

therefore it may be difficult for some 

facilities to avoid costs much higher 

than those EPA considered when 

establishing the performance standards. 

The cost-cost site-specific alternative 

ensures that the overall rule remains 

economically practicable for all 

facilities that would be subject to 

today’s proposed rule. Despite EPA’s 

best effort, site-specific costs are 

difficult to estimate in a national rule. 

For all of these reasons, EPA believes 

that the cost-cost site-specific 

compliance alternative is necessary to 

ensure that the proposed rule would be 

economically practicable for all Phase 

III existing facilities. In order to ensure 

that this alternative provides only the 

68472 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

minimum relaxation of performance 

standards that is needed to make the 

proposed rule economically practicable, 

proposed § 125.103(a)(5)(i) requires that 

the site-specific requirements achieve 

an efficacy that is as close as practicable 

to the applicable performance standards 

without resulting in costs that are 

significantly greater than those 

considered by the Administrator for a 

like facility when establishing the 

performance standards. 

EPA is proposing at § 125.103(a)(5) to 

limit the comparison of like facilities to 

Phase III existing facilities within the 

scope of the rule. EPA believes this 

provision is necessary and appropriate 

because different cost assumptions were 

used in estimating costs for the Phase II 

and Phase III existing facilities. (These 

differences are discussed in detail in the 

relevant Technical Development 

Documents (DCN 6–0004 and DCN 7–

0002.) 

Legal Authority for the Cost-Cost Test 

CWA section 316(b) authorizes a sitespecific determination of best 

technology available. Although, CWA 

section 316(b) authorizes EPA to 

promulgate national categorical 

requirements, the variety of factors to be 

considered in determining these 

requirements—such as location and 

design—indicate that site-specific 

conditions can be highly relevant to the 

determination of best technology 

available to minimize adverse 

environmental impact. In addition to 

specifying best technology available in 

relation to a national categorical 

performance standard, today’s proposed 

rule also authorizes a site-specific 

determination of best technology 

available when conditions at the site 

lead to a more costly array of controls 

than EPA had expected would be 

necessary to achieve the applicable 

performance standards.

This site-specific compliance option 

is similar to the ‘‘fundamentally 

different factors’’ provision in CWA 

section 301(n), which authorizes 

alternative requirements for sources 

subject to national technology-based 

standards for effluent discharges, if the 

facility can establish that it is 

fundamentally different with respect to 

factors considered by EPA in 

promulgating the national standard. The 

fundamentally different factors 

provision was added to the CWA in 

1987, but prior to the amendment, both 

the Second Circuit and the Supreme 

Court upheld EPA’s rules containing 

provisions for alternative requirements 

as reasonable interpretations of the 

statute. NRDC v. EPA, 537 F.2d 642, 647 

(2d Cir. 1976) (‘‘the establishment of the 

variance clause is a valid exercise of the 

EPA’s rulemaking authority pursuant to 

section 501(a) which authorizes the 

Administrator to promulgate regulations 

which are necessary and proper to 

implement the Act’’); EPA v. National 

Crushed Stone Ass’n, 449 U.S. 64 (1980) 

(approving EPA’s alternative 

requirements provision in a standard 

adopted pursuant to CWA section 

301(b)(1), even though the statute did 

not expressly permit a variance.) EPA’s 

alternative site-specific compliance 

option in this proposed rule is similarly 

a reasonable interpretation of section 

316(b) and a valid exercise of its 

rulemaking authority under CWA 

section 501. 

Based on this interpretation, EPA and 

State permitting authorities have been 

implementing CWA section 316(b) on a 

case-by-case basis for over 25 years. 

Such a case-by-case determination of 

best technology available has been 

recognized by courts as being consistent 

with the statute. See Hudson 

Riverkeeper Fund v. Orange and 

Rockland Util, 835 F. Supp. 160, 165 

(S.D.N.Y. 1993) (‘‘This leaves to the 

permit writer an opportunity to impose 

conditions on a case by case basis, 

consistent with the statute’’). 

EPA reasonably interprets CWA 

section 316(b) to authorize it to consider 

costs of compliance in determining best 

technology ‘‘available.’’ (See section I.) 

Therefore, where EPA fails to consider 

a facility’s unusual or disproportionate 

costs in setting the national 

requirements for best technology 

available, it reasonably authorizes 

permit authorities to set site-specific 

alternative limits to account for these 

costs. See Riverkeeper v. EPA, slip op. 

at 25 (2nd Cir. Feb. 3, 2004) (upholding 

site-specific alternative limits under the 

Phase I rule for new facilities where a 

particular facility faces disproportionate 

compliance costs). 

ii. Basis of the Cost-Benefit Test 

Under today’s proposal, EPA would 

allow a facility to use a comparison of 

its costs to the benefits of meeting the 

performance standards at its site (a 

‘‘cost-benefit test’’) as another basis for 

obtaining a site-specific determination 

of best technology available to minimize 

adverse environmental impact. Section 

316(b) authorizes consideration of the 

environmental benefit to be gained by 

requiring that the location, design, 

construction, and capacity of cooling 

water intake structures reflect the best 

technology available for the purpose of 

minimizing adverse environmental 

impact. Accordingly, in proposing the 

technologies on which EPA based the 

compliance alternatives and 

performance standards as the best 

technologies available for existing 

facilities to minimize adverse 

environmental impact, EPA considered 

the national cost of those technologies 

in comparison to the national benefits—

i.e., the reduction in impingement 

mortality and entrainment that EPA 

estimated would occur nationally if all 

Phase III existing facilities withdrawing 

greater than any of the co-proposed 

thresholds selected one of the 

compliance options in § 125.103(a)(2) 

through (4). While EPA believes that 

there is considerable value in 

promulgating national performance 

standards under section 316(b) based on 

what EPA determines, on a national 

basis, to be the best technology available 

to minimize adverse environmental 

impact, EPA also recognizes that, at 

times, determining what is necessary to 

minimize adverse environmental impact 

can necessitate a site-specific inquiry. 

EPA’s balance of the national costs and 

national benefits may not be similar to 

the comparison of costs and benefits at 

a specific site due to variations in: (1) 

The performance of intake technologies, 

and (2) characteristics of the waterbody 

in which the intake(s) are sited, 

including the resident aquatic biota. For 

example, there may be some facilities 

where the absolute numbers of fish and 

shellfish impinged and entrained is so 

minimal that the cost to achieve the 

required percentage reductions would 

be significantly greater than the benefits 

of achieving the required reductions at 

that particular site. More specifically, 

because of the characteristics of a 

particular waterbody, or the behavioral 

patterns of the fish or shellfish in that 

particular waterbody, there may be little 

or no impingement mortality or 

entrainment occurring at the site. For 

such a facility, the cost of reducing an 

already small amount of impingement 

mortality and entrainment by 80 to 95 

percent and 60 to 90 percent, 

respectively, may be significantly 

greater than the benefits. In short, it may 

not be cost-effective and, therefore may 

be economically impracticable for a 

facility to achieve percentage reductions 

when attempting to save a small number 

of fish or shellfish. For example, in a 

waterbody that is already degraded, very 

few aquatic organisms may be subject to 

impingement or entrainment, and the 

costs of retrofitting an existing cooling 

water intake structure may be 

significantly greater than the benefits of 

doing so. By requiring best technology 

available to minimize adverse 

environmental impact, section 316(b) 

invites a consideration of both 

technology and environmental 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68473

39See 118 Cong. Rec 33,762 (1972), reprinted in 

1 Legislative History of the Water Pollution Control 

Act Amendments of 1972, at 264 (1973)(Statement 

of Representative Don H. Clausen).

conditions, including the potential for 

adverse impacts, in the receiving 

waterbody. EPA believes it is a 

reasonable interpretation of the statute 

to allow the Director to consider the 

results of meeting the performance 

standards in terms of reducing 

environmental impact (i.e., the benefits) 

in cases where the costs of installing the 

technology are significantly greater than 

the reduction in environmental impacts 

would seem to warrant. As with the 

cost-cost site-specific provision, EPA 

also wants to ensure that any relaxation 

of the performance standards be the 

minimum necessary to ensure that the 

costs are not significantly greater than 

the benefits. Proposed § 125.103(a)(5)(ii) 

thus provides that alternative sitespecific requirements must achieve an 

efficacy that is as close as practicable to 

the applicable performance standards 

without resulting in costs that are 

significantly greater than the benefits of 

meeting the performance standards at 

the facility. 

Legal Authority for the Cost-Benefit Test

EPA believes that the Clean Water Act 

authorizes a site-specific determination 

of the best technology available to 

minimize adverse environmental impact 

where the costs of compliance with the 

rule’s performance standards are 

significantly greater than its benefits. 

This authority stems from the statutory 

language of CWA section 316(b). Section 

316(b) requires that cooling water intake 

structures reflect the best technology 

available for minimizing adverse 

environmental impact. The object of the 

best technology available is explicitly 

articulated by reference to the receiving 

water: To minimize adverse 

environmental impact in the waters 

from which cooling water is withdrawn. 

In contrast, under section 301, the goal 

of BAT is explicitly articulated by 

reference to a different purpose, to make 

reasonable further progress toward the 

national goal of eliminating the 

discharge of all pollutants (section 

301(b)(2)(A)). Similarly, under section 

304, the goal of BPT and BCT is 

explicitly articulated by reference to the 

degree of effluent reduction attainable. 

(Section 304(b)(1)(A) and section 

304(b)(4)(A)) 

EPA has previously considered the 

costs of technologies in relation to the 

benefits of minimizing adverse 

environmental impact in establishing 

section 316(b) limits, which historically 

have been done on a case-by-case basis. 

See, e.g., In Re Public Service Co. of 

New Hampshire, 10 ERC 1257 (June 17, 

1977); In Re Public Service Co. of New 

Hampshire, 1 EAD 455 (Aug. 4, 1978); 

Seacoast Anti-Pollution League v. 

Costle, 597 F. 2d 306 (1st Cir. 1979). 

Under CWA section 316(b), EPA may 

consider the benefits that the 

technology-based standard would 

produce in a particular waterbody, to 

ensure that it will ‘‘minimize adverse 

environmental impact.’’ EPA believes 

that the technology-based standards 

established in this proposed rule will, as 

a national matter, ‘‘minimize adverse 

environmental impact.’’ However, the 

degree of minimization contemplated by 

the national performance standards may 

not be justified by site-specific 

conditions. In other words, depending 

on the circumstances of the receiving 

water, it may be that application of less 

stringent controls than those that would 

otherwise be required by the 

performance standards will achieve the 

statutory requirement to ‘‘minimize’’

adverse environmental impact, when 

considered in light of economic 

practicability. An extreme example is a 

highly degraded ship channel with few 

fish and shellfish, but such situations 

can only be identified and addressed 

through a site-specific assessment. 

For these reasons, EPA reasonably 

interprets the phrase ‘‘minimize adverse 

environmental impact’’ in section 316(b) 

to authorize a site-specific consideration 

of the benefits of the technology-based 

standard on the receiving water. EPA 

continues to believe that any 

impingement or entrainment would be 

an adverse environmental impact, but 

has determined that section 316(b) does 

not require minimization of adverse 

environmental impact beyond that 

which can be achieved at a cost that is 

economically practicable. EPA believes 

that the relationship between costs and 

benefits is one component of economic 

practicability for purposes of section 

316(b) and the legislative history 

indicates that economic practicability 

may be considered in determining what 

is best technology available for purposes 

of section 316(b). The legislative history 

of section 316(b) indicates that the term 

‘‘best technology available’’ should be 

interpreted as ‘‘best technology 

available commercially at an 

economically practicable cost.’’ 39 EPA 

believes that allowing a relaxation of the 

performance standards when costs 

significantly exceed benefits, but only to 

the extent justified by the significantly 

greater costs, is a reasonable way of 

ensuring that adverse environmental 

impact be minimized at an 

economically practicable cost. This does 

not mean that there is a need to make 

a finding of ‘‘adverse environmental 

impact’’ before performance standards 

based CWA section 316(b) requirements 

would apply. Rather, EPA is authorizing 

an exception to national performance 

standards based requirements on a sitespecific basis in limited circumstances: 

when the costs of complying with the 

national performance standards are 

significantly greater than the benefits of 

compliance at a particular site.

3. Why Is EPA Proposing National 

Requirements for New Offshore and 

Coastal Oil and Gas Extraction 

Facilities? 

After EPA proposed the Phase I rule 

for new facilities (65 FR 49060, August 

10, 2000), the Agency received adverse 

comment from operators of mobile 

offshore and coastal drilling units 

concerning the limited information 

about their cooling water intakes, 

associated impingement mortality and 

entrainment, costs of technologies, or 

achievability of the controls proposed 

by EPA. On May 25, 2001, EPA 

published a Notice of Data Availability 

(NODA) for Phase I that, in part, sought 

additional data and information about 

mobile offshore and coastal drilling 

units (see 66 FR 28857). In the Phase I 

final rule, EPA committed to ‘‘propose 

and take final action on regulations for 

new offshore oil and gas extraction 

facilities, as defined at 40 CFR 435.10 

and 40 CFR 435.40, in the Phase III 

section 316(b) rule.’’ See 66 FR 65256. 

Today’s proposed regulation would 

establish national requirements for new 

offshore oil and gas extraction facilities 

that use a cooling water intake structure 

to withdraw water from waters of the 

U.S.

Requirements for new offshore oil and 

gas extraction facilities are proposed in 

a new subpart N. New onshore oil and 

gas extraction facilities are already 

potentially covered under section 316(b) 

Phase I requirements; new offshore oil 

and gas extraction facilities that would 

be subject to subpart N include new 

coastal and offshore oil and gas 

extraction facilities. The proposed 

requirements for these facilities are 

similar to some, but not all, of the 

requirements contained in the Phase I 

rule applicable to other new facilities. 

For example, the Phase I requirement to 

reduce intake flow commensurate with 

a closed-cycle, recirculating cooling 

system would not apply to these 

facilities. EPA is seeking comment only 

on the new facility requirements 

contained in proposed Subpart N, 

which would be applicable to new 

offshore oil and gas extraction facilities. 

Under today’s proposed rule, new 

offshore oil and gas extraction facilities 

68474 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

that withdraw greater than 2 MGD and 

that employ sea chests as cooling water 

intake structures, and are fixed facilities 

would have to comply with the 

requirements in § 125.134(b)(1)(ii). 

These requirements address intake flow 

velocity, specific impact concerns (e.g., 

threatened or endangered species, 

critical habitat, migratory or sport or 

commercial species), required 

information submission, monitoring, 

and recordkeeping. Under this proposal, 

new offshore oil and gas extraction 

facilities that withdraw greater than 2 

MGD that do not employ sea chests as 

cooling water intake structures, and are 

fixed facilities would have to comply 

with the requirements in 

§ 125.134(b)(1)(i). The one additional 

requirement for these facilities is 

§ 125.134(b)(5), which requires the 

selection and implementation of design 

and construction technologies or 

operational measures to minimize 

entrainment of entrainable life stages of 

fish or shellfish. Fixed facilities can also 

choose to comply through Track II, 

which allows a site-specific 

demonstration that alternative 

requirements would produce 

comparable levels of impingement 

mortality and entrainment reduction. 

New offshore oil and gas facilities that 

are not fixed facilities would have to 

comply with the regulations at 

§ 125.134(b)(1)(iii). Track II is not 

available to non-fixed (mobile) facilities 

because non-fixed facilities, which are 

expected to operate at multiple 

locations, would not be able to perform 

a site-specific demonstration. For this 

same reason, EPA has dropped some of 

the other site-dependent requirements 

for non-fixed facilities (e.g., baseline 

biological assessment). EPA requests 

comment on the practicability of Track 

II demonstrations and other sitedependent requirements for non-fixed 

facilities. 

EPA has limited information on 

environmental impacts associated with 

the use of cooling water intake 

structures at new offshore oil and gas 

extraction facilities but believes the 

potential for such impacts is sufficient 

to warrant including requirements for 

new offshore oil and gas extraction 

facilities in this proposed rule (see

section V for more detailed discussion). 

In addition, although such technologies 

are not generally in use at existing 

offshore oil and gas extraction facilities, 

EPA believes that technologies are 

available for use by new facilities in this 

subcategory to meet the proposed 

requirements as described below. EPA 

requests comment, including data, on 

environmental impacts from, and 

availability of technologies for, cooling 

water intake structures at new offshore 

oil and gas extraction facilities. 

Some offshore oil and gas extraction 

facilities employ an underwater 

compartment within the facility or 

vessel hull or pontoon through which 

sea water is drawn in or discharged, 

often called a ‘‘sea chest.’’ A passive 

screen (strainer) is often set along the 

flush line of the sea chest. Pumps draw 

seawater from open pipes in the sea 

chest cavity for a variety of purposes 

(e.g., cooling water, fire water, and 

ballast water). These intakes are 

normally the only source of cooling 

water for the facility; therefore, it is 

crucial to the operation of these 

facilities that the intake structures be 

kept clean and clear of fish, jellyfish, 

plastic bags, and other debris. To 

accomplish this these intake structures 

can, and have been, designed for low 

intake velocity (i.e., less than 0.5 feet 

per second) and/or include fish 

protection equipment; see the Technical 

Development Document for details. 

As outlined in Alaska’s oil and gas 

leasing requirements, oil and gas 

extraction facilities in Alaskan State 

waters are currently subject to an 

impingement control velocity limit of 

0.1 feet per second (i.e., more stringent 

than EPA’s design requirement of 0.5 

feet per second in the Phase I new 

facility rule to minimize impingement 

mortality of aquatic organism). These 

State regulations suggest that 

impingement controls that would meet 

the velocity requirements of this 

proposed rule are available for new 

offshore oil and gas extraction facilities 

in Alaskan or similar waters. 

However, facilities using sea chests 

may have limited opportunities to meet 

the entrainment control requirements 

applicable to facilities subject to the 

Phase I rule. A 2003 literature survey by 

Mineral Management Services (DCN 7–

0012) identified no evidence of 

entrainment controls successfully fitted 

to offshore oil and gas extraction vessels 

with sea chests such as drill ships, jackups, MODUs, and barges. EPA’s data 

suggests that the only physical 

technology controls for entrainment at 

facilities with sea chests would entail 

installation of equipment projecting 

beyond the hull of the vessel. Such 

controls may not be feasible due to 

facility design requirements, even for 

new facilities that could avoid the 

challenges of retrofitting control 

technologies.

EPA does have limited information 

showing the entrainment reduction 

benefits of planar wedgewire screens. 

EPA is considering, and requests 

comment on, whether entrainment 

technologies, such as planar wedgewire 

screens, are available for use by 

facilities using sea chests and whether 

based on such technologies it would be 

appropriate to apply § 125.134(b)(5) 

(requiring design and construction 

technologies or operational measures to 

minimize entrainment of entrainable life 

stages of fish or shellfish) to such 

facilities. 

EPA also considered whether all new 

offshore vessels could be constructed 

without employing sea chests. A 

technology must prove to be practicable 

to be a viable alternative to current 

technology. In this case, EPA treats a 

viable alternative to sea chests as any 

practical alternative configuration/

technology successfully implemented at 

existing facilities, including those in 

other manufacturing industries, with 

similar seawater intake structures. EPA 

data suggests the only demonstrated 

design for drill ships and semisubmersible MODUs is to use sea chests 

because they allow the vessel to 

maintain appropriate fluid dynamics, 

overall optimal vessel shape, and a safe 

seaworthy profile. Therefore, EPA does 

not believe entrainment controls are 

feasible at such facilities. 

For new offshore oil and gas 

extraction facilities with intake 

structures other than sea chests, EPA 

believes the proposed entrainment 

controls are feasible. For example, a 

caisson intake (as referred to here) is 

simply a steel pipe attached to a fixed 

structure that extends from an operating 

area down some distance into the water. 

It is used to provide a protective shroud 

around another process pipe or pump 

that is lowered into the caisson from the 

operating area. The most likely 

technologies to reduce impingement 

mortality and entrainment of marine life 

in this type of structure would be 

passive intake screens or velocity caps. 

Air sparges and copper nickel alloys can 

be used to control biofouling. Other 

technologies such as acoustic barriers, 

electro barriers or intake relocation may 

also be used. 

In summary, EPA is proposing to 

apply requirements that are consistent 

with some—but not all—of the Phase I 

provisions to new offshore oil and gas 

extraction facilities, because of 

differences in technological availability 

between such facilities and those 

covered in the Phase I rule. Because 

available information indicates that it is 

not feasible for all new offshore oil and 

gas extraction facilities to employ 

closed-cycle recirculating cooling 

systems, new offshore oil and gas 

extraction facilities would not be subject 

to Phase I requirements based on closedcycle recirculating cooling systems. 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68475

40See 118 Cong. Rec 33,762 (1972), reprinted in 

1 Legislative History of the Water Pollution Control 

Act Amendments of 1972, at 264 (1973)(Statement 

of Representative Don H. Clausen).

Specifically, new offshore oil and gas 

extraction facilities would not have to 

meet requirements equivalent to 

§ 125.84(b)(1) (requiring that a facility 

reduce intake flow to a level 

commensurate with a closed-cycle 

recirculating cooling system) and 

§ 125.84(d)(1) (Track II requirements 

using closed-cycle recirculating cooling 

systems as a baseline). 

EPA is proposing to exclude new 

seafood processing vessels from the 

proposed national requirements. Data 

available to the Agency indicate that 

given the relatively low cooling water 

flows used by these vessels, the 

propensity for reduced intake of fish or 

debris due to the vessel’s speed in 

relation to the intake’s orientation and 

intake velocity, and their highly mobile 

character, these vessels are not likely to 

cause significant adverse environmental 

impacts. Further, data available to the 

Agency has not clearly identified 

available technologies that would 

reduce entrainment for such vessels. In 

addition, EPA is proposing to exclude 

new offshore liquified natural gas 

import terminals from the proposed 

national requirements. Such facilities 

withdraw water primarily for warming 

(not cooling) purposes, to heat liquified 

natural gas to temperatures at which it 

becomes a gas and can enter the natural 

gas distribution pipelines. Thus, it 

appears that these facilities would not 

meet the 25 percent exclusive cooling 

water use threshold, and would 

therefore be beyond the scope of section 

316(b). Seafood processing vessels and 

new offshore liquified natural gas 

import terminals would continue to be 

subject to any requirements for their 

cooling water intake structures 

established by permit Directors on a 

case-by-case basis using best 

professional judgment. 

EPA requests comment on all aspects 

of this proposed approach. 

B. Economic Practicability 

The legislative history of section 

316(b) indicates that the term ‘‘best 

technology available’’ should be 

interpreted as ‘‘best technology 

available commercially at an 

economically practicable cost.’’ 40 This 

interpretation reflects congressional 

concern that the application of best 

technology available should not impose 

an impracticable and unbearable 

economic burden. Thus, EPA has 

conducted extensive analyses of the 

economic impacts of this proposed rule 

and the co-proposed options discussed 

above, using an integrated energy 

market model (the IPM) and an analysis 

of market costs and residential rates for 

the energy sector, and a discounted cash 

flow analysis model for the facility, 

firm, and market levels for 

manufacturers. For a complete 

discussion of these analyses, please 

refer to section VIII of this preamble or 

the Economic Analysis in support of 

this proposed rule (DCN 7–0002).

EPA believes that the requirements of 

this proposed rule reflect the best 

technology available at an economically 

practicable cost. EPA examined the 

effects of the proposed rule’s 

compliance costs on capacity, 

generation, variable production costs, 

prices, net income, and other measures, 

both at the market and facility levels. In 

addition, the other economic analyses 

conducted by EPA showed that the costs 

for this proposed rule would be 

economically practicable. 

EPA believes that a consideration of 

the relationship of costs to 

environmental benefits is an important 

component of economic practicability. 

As discussed in section VIII.C of the 

proposed Phase I rule (65 FR 49094), 

EPA has long recognized that there 

should be some reasonable relationship 

between the cost of cooling water intake 

structure control technology and the 

environmental benefits associated with 

its use. EPA requests comment on the 

relationship of costs to environmental 

benefits of this proposed rule.

C. What Is the Proposed Role of 

Restoration and Trading? 

1. What Is the Proposed Role of 

Restoration? 

Under today’s proposed rule, 

consistent with the Phase II regulation, 

EPA would provide Phase III existing 

facilities with the option to use 

restoration under compliance 

alternatives § 125.103(a)(2), (3), and (5) 

where the performance of the 

restoration measures (the production 

and increase of fish and shellfish in the 

facility’s waterbody or watershed, 

including maintenance of community 

structure and function), would be 

substantially similar to that which 

would have been achieved if the facility 

reduced its impingement mortality and 

entrainment through the use of design 

and construction technologies and/or 

operational measures, to meet the 

applicable performance standards. The 

role of restoration under this proposed 

rule is to provide additional flexibility 

to facilities in complying with the rule 

by eliminating or significantly offsetting 

the adverse environmental impact 

caused by the operation of a cooling 

water intake structure. Restoration 

measures that increase fish and shellfish 

in an impacted waterbody or watershed 

and would result in performance 

substantially similar to that which 

would otherwise be achieved through 

reductions in impingement mortality 

and entrainment further the goal of 

minimizing adverse environmental 

impact while offering additional 

flexibility to both permitting authorities 

and facilities. Restoration measures may 

include such activities as removal of 

barriers to fish migration, reclamation of 

degraded aquatic organism habitat, or 

stocking of aquatic organisms. 

Restoration measures have been used 

at existing facilities as one of many tools 

to implement section 316(b) on a caseby-case, best professional judgment 

basis to compensate for the death and 

injury of fish and other aquatic 

organisms caused by the cooling water 

intake structure. Under today’s 

proposed rule, a Phase III existing 

facility could utilize restoration 

measures either in lieu of or as a 

supplement to design and construction 

technologies and/or operational 

measures. For example, a facility could 

demonstrate to the Director that velocity 

controls are the most feasible 

technology choice for the facility but 

that, when used on their own, the 

velocity controls are insufficient to meet 

the applicable performance standards at 

§ 125.103(b). The facility could then, in 

conjunction with the use of velocity 

controls, implement restoration 

measures to increase the fish and 

shellfish productivity of the waterbody 

in order to meet the performance 

standards at § 125.103(b). Another 

facility could demonstrate to the 

Director that restoration measures alone 

achieve the greatest compliance with 

the performance standards. A facility 

could alternatively request a sitespecific determination of best 

technology available under 

§ 125.103(a)(5) and use restoration 

measures to meet the alternate 

requirements. Facilities that are 

currently utilizing restoration measures 

to comply with their existing section 

316(b) requirements may use these 

measures to comply with the 

performance standards at § 125.103(b) or 

site-specific requirements at 

§ 125.103(a)(5). However, restoration 

measures that are required under other 

statutory provisions or regulations (e.g., 

CWA section 404) could not be used to 

comply with today’s proposed rule. 

Facilities that propose to use 

restoration measures would need to 

demonstrate to the Director that they 

evaluated the use of design and 

68476 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

construction technologies and 

operational measures and determined 

that the use of restoration measures is 

appropriate because meeting the 

applicable performance standards or 

requirements through the use of other 

technologies is less feasible, less costeffective, or less environmentally 

desirable than meeting the standards in 

whole or in part through the use of 

restoration measures. Facilities also 

would need to demonstrate that the 

restoration measures they plan to 

implement, alone, or in combination 

with design and construction 

technologies and/or operational 

measures, would produce ecological 

benefits (production of fish and 

shellfish) at a level that is substantially 

similar to the level that would be 

achieved through compliance with the 

applicable impingement mortality and/

or entrainment performance standards 

under § 125.103(b), or alternative sitespecific requirements under 

§ 125.103(a)(5). In other words, 

restoration measures would have to 

replace the fish and shellfish lost to 

impingement mortality and entrainment 

to the extent the loss would have been 

reduced by otherwise applicable 

requirements, either as a substitute or as 

a supplement to reducing impingement 

mortality and entrainment through 

design and control technologies and/or 

operational measures. While the species 

makeup of the replacement fish and 

shellfish would not have to be exactly 

the same as that of the impingement 

mortality and entrainment losses, the 

Director would have to make a 

determination that the net effect is to 

produce a level of fish and shellfish in 

the waterbody that is ‘‘substantially 

similar’’ to that which would result 

from meeting the performance standards 

through design and construction 

technologies and/or operational 

measures alone. The proposed rule 

would require that a facility use an 

adaptive management method for 

implementing restoration measures 

because the performance of restoration 

projects must be regularly monitored 

and potentially adjusted to ensure the 

projects achieve their objectives (see 67 

FR 17146–17148 and 68 FR 13542). 

The proposed rule also would require 

that restoration projects which replace 

the lost fish and shellfish with a 

different species mix (‘‘out of kind’’

restoration) be based on a watershed 

approach to restoration planning. The 

boundaries of a ‘‘watershed’’ should be 

guided by the cataloging unit of the 

‘‘Hydrologic Unit Map of the United 

States’’ (USGS, 1980), although it may 

be appropriate to use another watershed 

or waterbody classification system 

developed at the State or local level if 

such a system compares favorably in 

level of detail. For example, in coastal 

systems that support migratory fish, a 

coastal waterbody that transects a 

number of watersheds may be the most 

appropriate unit for planning 

restoration. 

Legal Authority for Restoration 

While the Phase I rule also authorized 

use of restoration measures, today’s 

proposed rule includes additional 

regulatory controls on the use of 

restoration measures to ensure that they 

are used appropriately by existing 

facilities to comply with the applicable 

performance requirements or site 

specific alternative requirements. For 

example, as described above, restoration 

measures are authorized only after a 

facility demonstrates to the permitting 

authority that it has evaluated other 

design and construction technologies 

and operational measures and 

determined that they are less feasible, 

less cost effective, or less 

environmentally desirable than meeting 

the performance standards or alternative 

site-specific requirements in whole or in 

part through the use of restoration 

measures. The facility must also 

demonstrate that the proposed 

restoration measures will produce 

ecological benefits (i.e., the production 

of fish and shellfish for the facility’s 

waterbody or watershed, including 

maintenance of community structure 

and function) at a level that is 

substantially similar to the level a 

facility would achieve through 

compliance with the applicable 

performance standards or alternative 

site-specific requirements. Further, the 

permitting authority must review and 

approve the restoration plan to 

determine whether the proposed 

restoration measures will meet the 

applicable performance standards or site 

specific alternative requirements. 

Consequently, the restoration provisions 

of today’s proposed rule are designed to 

minimize adverse environmental impact 

to a degree that is comparable to the 

other technologies on which the rule is 

based. 

The use of restoration to meet the 

requirements of section 316(b) is 

consistent with the goals of the Clean 

Water Act; measures that restore fish 

and shellfish to compensate for those 

that are impinged and entrained further 

the objective of the Clean Water Act ‘‘’to 

restore, maintain, and protect the 

biological integrity of the nation’s 

waters.’’ 33 U.S.C. 1251(a) (emphasis 

added). It is also consistent with EPA’s 

and States’ past practices in 

implementing section 316(b) in 

individual permit decisions. For at least 

twenty years, EPA and States have 

authorized existing facilities to comply 

with section 316(b) requirements, at 

least in part, through the use of 

restoration measures. For example, the 

Chalk Point Generating Station, located 

on the Patuxent River in Prince George’s 

County, Maryland constructed a fish 

rearing facility in partial compliance of 

its section 316(b) obligations (DCN 1–

5023–PR).

Although the United States Court of 

Appeals for the Second Circuit recently 

remanded the portion of EPA’s Phase I 

new facility rule that authorized 

restoration measures to meet that rule’s 

requirements, EPA believes that portion 

of the decision should not apply to this 

Phase III proposed rulemaking. Indeed, 

the Second Circuit explicitly stated that 

‘‘[i]n no way [does it] mean to 

predetermine the factors and standard 

applicable to Phase II and III of the 

rulemaking.’’ Riverkeeper v. EPA, slip 

op. at 12, note 13 (2nd Cir. Feb. 3, 2004). 

This is probably because there are 

important differences between new and 

existing facilities that warrant 

interpreting section 316(b) more broadly 

to give existing facilities additional 

flexibility to comply with section 

316(b). As noted above, restoration 

measures have been used to comply 

with section 316(b) limits at existing 

facilities for several years because of the 

more limited availability of other 

technologies for existing facilities. Costs 

to retrofit an existing facility to install 

a ‘‘hard’’ technology can be much higher 

than costs to install one at the time a 

facility is constructed, and those costs 

can vary considerably from site to site. 

Thus, the range of technologies that are 

‘‘available’’ to existing facilities to meet 

the performance standards is narrower 

than the range of technologies available 

to new facilities. 

In recognition of the vast differences 

between existing and new facilities, 

Congress established separate sections 

in the Clean Water Act for establishing 

discharge limitations on existing and 

new facilities. Effluent limitations 

guidelines for existing facilities are 

established under sections 301 and 304, 

whereas new source performance 

standards are established under section 

306. Those sections set out two distinct 

sets of factors for developing effluent 

limitations guidelines for existing 

facilities and new source performance 

standards for new facilities. Notably, 

there are only two factors explicitly 

stated in section 306 for the 

Administrator to consider in 

establishing new source performance 

standards—cost and non-water quality 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68477

impacts, whereas for existing facilities 

Congress calls upon EPA to consider a 

much broader range of factors in section 

304(b)(2)(b): the age of equipment and 

facilities involved, the process 

employed, the engineering aspects 

* * * of various types of control 

techniques, process changes, the cost of 

achieving such effluent reduction, nonwater quality environmental impacts 

(including energy requirements), and 

such other factors as [EPA] deems 

appropriate. This list reflects the wide 

range of facility characteristics and 

circumstances that can influence the 

feasibility and availability of a 

particular technology across a particular 

industry. Existing facilities generally 

face more and different problems than 

new facilities because of the 

technological challenges and high costs 

associated with retrofitting as compared 

to building a new facility. Indeed, by 

including the phrase ‘‘and such other 

factors as [EPA] deems appropriate,’’

Congress made certain that EPA would 

have sufficient flexibility in establishing 

limitations for existing facilities to 

consider all relevant factors. For several 

other reasons, EPA believes the Second 

Circuit decision is not binding on this 

Phase III proposed rule. First, section 

316(b) requires the design of a cooling 

water intake structure to reflect the best 

technology available to ‘‘minimize 

adverse environmental impact.’’ The 

phrase ‘‘minimize adverse 

environmental impact’’ is not defined in 

section 316(b). For the Phase III 

proposed rule, EPA interprets this 

phrase to allow facilities to minimize 

adverse environmental impact by 

reducing impingement mortality and 

entrainment, or to minimize adverse 

environmental impact by compensating 

for those impacts after the fact. Section 

316(b) does not explicitly state when the 

adverse environmental impact of 

cooling water structures must be 

minimized—that is whether they must 

be prevented from occurring in the first 

place or compensated for after the fact 

or where the minimization most 

occurs—at the point of intake or at some 

other location in the same watershed. 

Therefore, under Chevron, EPA is 

authorized to define ‘‘minimize’’ to 

authorize restoration at existing 

facilities to minimize the effects of 

adverse environmental impact. 

In another context under the Clean 

Water Act, EPA has interpreted 

authority to ‘‘minimize adverse effects’’

as including authority to require 

environmental restoration. Section 404 

of the CWA authorizes the Army Corps 

of Engineers to issue permits for 

discharges of dredged or fill material 

into waters of the United States. EPA 

was granted authority to establish 

regulations containing environmental 

guidelines to be met by the Corps in 

issuing section 404 permits. See CWA 

section 404(b)(1). Current regulations, in 

place since 1980, prohibit a discharge 

unless, among other requirements, all 

practicable steps are taken to avoid, 

minimize and mitigate for the 

environmental effects of a discharge. 

See 40 CFR 230.10. Of particular 

relevance here, the regulations require 

that steps be taken to ‘‘minimize 

potential adverse effects of the discharge 

on the aquatic ecosystem’’ (40 CFR 

230.10(d)). EPA has specifically defined 

minimization steps to include 

environmental restoration. See 40 CFR 

230.75(d) (‘‘Habitat development and 

restoration techniques can be used to 

minimize adverse impacts and to 

compensate for destroyed habitat’’).

Moreover, at the time of the Phase I 

litigation, EPA had not interpreted the 

term ‘‘reflect’’ in section 316(b), and 

therefore, the Second Circuit did not 

consider its meaning in determining 

whether restoration could be used as a 

design technology to meet the Phase I 

rule requirements. Section 316(b) 

requires that ‘‘the location, design, 

construction, and capacity of cooling 

water intake structures reflect the best 

technology available for minimizing 

adverse environmental impact.’’ The 

term ‘‘reflect’’ is significant in two 

respects. First, it indicates that the 

design, location, construction and 

capacity of the cooling water intake 

structure itself must be based on the 

best technology available for such 

structures. This authorizes EPA to 

identify technologies that can be 

incorporated into the physical structure 

of the intake equipment. It also 

indicates that the choice of what 

actually is the best physical 

configuration of a particular cooling 

water intake structure can take into 

account, i.e., reflect, other 

technologies—and their effects—that are 

not incorporated into the structure 

itself. For example, barrier nets are not 

incorporated into the physical design of 

the cooling water intake structure, but 

their use—and effectiveness—influences 

the physical design of the cooling water 

intake structure. Another relevant 

example is the technology known as 

‘‘closed-cycle’’ cooling. Although this 

technology is physically independent of 

the cooling water intake structure, it 

directly influences decisions regarding 

the design capacity of the cooling water 

intake structure: as more cooling water 

is recycled, less needs to be withdrawn. 

Both barrier nets and closed-cycle 

cooling are considered ‘‘design’’

technologies.’’ Similarly, properly 

designed restoration measures can be 

best technologies available that can 

influence the design of the physical 

cooling water intake structure. To put it 

another way, for purposes of 

minimizing adverse environmental 

impact, requirements for cooling water 

intake structures reflect a variety of best 

technologies available, which EPA 

construes to include restoration 

measures. A dry cooling system is 

another example of a technology that 

although physically independent of the 

cooling water intake structure is 

nonetheless considered an acceptable 

method to minimize adverse 

environmental impacts. In fact, since a 

dry cooling system uses air as a cooling 

medium, it uses little or no water, 

dispensing altogether with the need for 

a cooling water intake structure. 

EPA has discretion to characterize 

restoration measures as technologies for 

purposes of section 316(b). Section 

316(b) does not define either the phrase 

‘‘cooling water intake structure’’ or the 

term ‘‘technology’’ and, therefore, leaves 

their interpretation to EPA. EPA has 

defined the phrase cooling water intake 

structure in today’s rule to mean the 

total physical structure and any 

associated waterways used to withdraw 

cooling water from waters of the United 

States. This definition embraces 

elements both internal and external to 

the intake equipment. EPA did not 

define the term technology in today’s 

proposed rule, but looked for guidance 

to section 304(b), which the Second 

Circuit has recognized can help 

illuminate section 316(b). Section 

301(b)(2) best available technology 

limitations are based on factors set forth 

in section 304(b). Section 304(b), while 

not using the term technology, discusses 

the ‘‘application of the best control 

measures and practices achievable 

including treatment techniques, process 

and procedure innovations, operating 

methods, and other alternatives.’’ This 

is a broad, nonexclusive list. Indeed, 

BAT effluent limitations guidelines 

under this authority have been based on 

a vast array of treatment techniques, 

operation practices (including chemical 

substitution), and management 

practices. See 40 CFR part 420 (effluent 

guidelines for concentrated animal 

feeding operations); 40 CFR part 430, 

subparts B & E (effluent guideline for 

pulp and paper industry). See also 62 

FR 18504 (April 15, 1998). 

Employing this broad concept of 

technology, in today’s proposed rule 

EPA has determined that the design of 

cooling water intake structures may 

reflect technologies relating to the 

restoration of fish and shellfish in the 

68478 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

waters from which cooling water is 

withdrawn. Restoration is not included 

in the definition of ‘‘design and 

construction technology’’ in today’s 

proposed rule so as to distinguish 

restoration from ‘‘hard’’ technologies for 

purposes of the proposed rule. Under 

the regulatory scheme of the proposed 

rule, restoration is treated differently 

than other technologies in several 

respects, all of which are to help ensure 

that restoration projects achieve 

substantially similar performance as 

design and construction technologies 

and/or operational measures. When 

these restoration technologies are used 

they must produce ecological benefits 

(the production of fish and shellfish for 

a facility’s waterbody or watershed, 

including maintenance of community 

structure and function) at a level that is 

substantially similar to the level the 

facility would achieve by using other 

design and construction technologies 

and/or operational measures to achieve 

the applicable performance standards or 

alternative site-specific performance 

requirements in § 125.103. In other 

words, the operation of the cooling 

water intake structure together with 

these restoration technologies will 

achieve the overall performance 

objective of the statute: To minimize the 

adverse environmental impact of 

withdrawing cooling water. For 

facilities using this authority, their 

hardware decisions for the cooling 

water intake structure thus take into 

account—or reflect—the effects of 

restoration technology, as well as other 

technologies external to the intake 

structure itself. 

EPA acknowledges that in 1982, when 

Congress was considering substantial 

amendments to the Clean Water Act, 

EPA testified in support of a proposed 

amendment to CWA section 316(b) that 

would have expressly authorized the 

use of restoration measures as a 

compliance option. According to the 

Second Circuit, this suggested that EPA 

may have interpreted section 316(b) at 

that time as not authorizing restoration 

measures to minimize the adverse 

environmental impact of cooling water 

intake structures. In EPA’s view, the 

Second Circuit gave undue weight to 

that testimony, particularly because it 

was provided before the Supreme 

Court’s decision in Chevron U.S.A. v. 

Natural Resources Defense Council, 467 

U.S. 837 (1984), which gave 

administrative agencies latitude to fill in 

the gaps created by ambiguities in 

statutes the agencies have been charged 

by Congress to implement. For at least 

twenty years, EPA and States have 

authorized existing facilities to comply 

with section 316(b) requirements, at 

least in part, through the use of 

restoration measures. Additionally, 

since 1982 EPA has gathered 

substantially more data to inform its 

judgment regarding cooling water intake 

structures, the environmental impact 

resulting from them, and various 

technologies available to reduce 

impingement mortality and 

entrainment. Finally, EPA notes that, in 

contrast to water quality based effluent 

limitations that are included in NPDES 

permits to meet water quality standards, 

the required performance of restoration 

measures under this proposed rule is 

not tied to conditions in the waterbody. 

Rather it is tied directly to the 

performance standards, just as is the 

performance of the other technologies 

that facilities may use to meet the 

standards. While the design and 

operation of restoration measures will 

necessarily be linked to conditions in 

the waterbody (as is also the case for 

‘‘hard’’ technologies) the performance 

standards that restoration measures 

must meet are not. 

2. What Is the Role of Trading in 

Today’s Proposed Rule? 

Under today’s proposed rule, if a State 

demonstrates to the Administrator that 

it has adopted alternative regulatory 

requirements in its NPDES program that 

will result in environmental 

performance within a watershed that is 

comparable to the reductions of 

impingement mortality and entrainment 

that would otherwise be achieved under 

§ 125.103, the Administrator must 

approve such alternative requirements 

(see § 125.100(c)). A trading program 

could be a part of these alternative 

regulatory requirements. 

Trading under other EPA programs 

has been shown to provide 

opportunities for regulatory compliance 

at reduced costs. EPA’s Office of Water’s 

Water Quality Trading Policy, published 

in January 2003 (see DCN 6–5002), fully 

supports trading nutrients and sediment 

and adopts a case-by-case approach to 

evaluating proposals to trade other 

pollutants. Trading in the context of 

section 316(b) raises many complex 

issues, for example, how to establish 

appropriate units of trade and how to 

measure these units effectively given the 

dynamic nature of the populations of 

aquatic organisms subject to 

impingement mortality and 

entrainment. Should a State choose to 

propose a trading program under 

§ 125.100(c), EPA would evaluate the 

State’s proposal on a case-by-case basis 

to ensure the program complies with the 

regulatory requirement—that it will 

result in environmental performance 

within a watershed that is comparable 

to the reductions of impingement 

mortality and entrainment that would 

otherwise be achieved under the 

requirements established at § 125.103. 

For more information on approaches to 

trading under section 316(b) and 

considerations, see the Phase II 

proposed rule at 67 FR 17170–17173; 

April 9, 2002. 

As in Phase II, questions have been 

raised by stakeholders in the context of 

EPA’s section 316(b) rulemakings as to 

whether these proposed requirements 

would allow for trading of aquatic 

organisms for pollutant discharges. EPA 

is concerned that such a program may 

introduce comparability and 

implementation challenges that would 

be difficult to overcome, and therefore, 

EPA does not expect that such a 

program would work within the 

framework of today’s proposed rule. In 

addition, EPA does not believe that it is 

possible at this time to quantify with 

adequate certainty the potential effects 

on ecosystem function, community 

structure, biodiversity, and genetic 

diversity of such trades, especially 

when threatened and/or endangered 

species are present. Based on the 

current state of the science in aquatic 

community ecology and ecological risk 

assessment, States wishing to develop 

trading programs in the context of 

section 316(b) would be better off 

focusing on programs based on metrics 

of comparability between fish and 

shellfish gains and losses among trading 

facilities, rather than the much more 

complex metrics that would be 

necessary for comparability among fish 

and shellfish losses on the one hand, 

and pollutant reductions on the other 

hand (69 FR 41609). EPA requests 

comment on the potential role of trading 

in the context of today’s proposed 

rulemaking and possible approaches for 

developing a trading program.

VII. Implementation 

As in Phase I and II, proposed section 

316(b) requirements for Phase III 

existing facilities and new offshore oil 

and gas extraction facilities would be 

implemented through the NPDES permit 

program. Today’s proposal would 

establish implementation requirements 

consistent with the Phase II final rule 

for Phase III existing facilities. This 

proposed rule would also establish 

implementation requirements for new 

offshore oil and gas extraction facilities 

that are generally consistent with Phase 

I requirements. Today’s proposal would 

establish application requirements for 

Phase III existing facilities under 40 CFR 

122.21 and proposed § 125.104, 

monitoring requirements under 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68479

proposed § 125.105, and record keeping 

and reporting requirements under 

proposed § 125.106. For new offshore 

oil and gas extraction facilities, today’s 

proposal would establish application 

requirements consistent with 40 CFR 

122.21 and proposed § 125.136, 

monitoring requirements under 

proposed § 125.137, and record keeping 

and reporting requirements consistent 

with proposed § 125.138. The proposed 

regulations also require the Director to 

review application materials submitted 

by each regulated facility and include 

monitoring and record keeping 

requirements in the permit (§ 125.107, 

§ 125.139). 

A. When Would the Proposed Rule 

Become Effective? 

If promulgated as proposed, this 

proposed rule would become effective 

60 days after the final rule is published 

in the Federal Register. Phase III 

existing facilities subject to today’s 

proposed rule would need to comply 

with the Subpart K requirements when 

an NPDES permit containing 

requirements consistent with Subpart K 

is issued to the facility. Under existing 

NPDES program regulations, this would 

occur when an existing NPDES permit 

is reissued or, when an existing permit 

is modified or revoked and reissued. For 

facilities whose permits are expiring, 

EPA recognizes that facilities will need 

a reasonable time period to conduct 

baseline studies and develop and 

implement an appropriate suite of 

control technologies and this is 

provided for in § 125.104(a)(2)(ii). 

Under today’s proposed rule, new 

offshore oil and gas extraction facilities 

would need to comply with the Subpart 

N requirements when an NPDES permit 

containing requirements consistent with 

Subpart N is issued to the facility 

(§ 125.132). 

B. What General Information Would I Be 

Required To Submit to the Director 

When I Apply for My Reissued NPDES 

Permit? 

The NPDES regulations that establish 

the application process at § 122.21 

generally require that facilities currently 

holding a permit submit information 

and data 180 days prior to the end of the 

permit term, which is five years. Under 

today’s proposed rule, Phase III existing 

facilities and new offshore oil and gas 

extraction facilities would be required 

to submit the information that is 

required under § 122.21 of today’s 

proposed rule with their application for 

permit issuance or reissuance. 

Today’s proposed rule would modify 

regulations at § 122.21 to require 

existing Phase III facilities and new 

offshore oil and gas extraction facilities 

to prepare and submit some of the same 

information required for new Phase I 

and existing Phase II facilities. The 

proposed application requirements 

would require owners or operators of all 

Phase III existing facilities to submit two 

general categories of information when 

they apply for a reissued NPDES permit. 

The general categories of information 

would include (1) physical data to 

characterize the source waterbody in the 

vicinity where the cooling water intake 

structure(s) is/are located, and (2) data 

to characterize the design and operation 

of the cooling water intake structures. 

As in Phase II, Phase III existing 

facilities would not be required to 

submit the Source Water Baseline 

Biological Characterization Data 

required under § 122.21(r)(4). However, 

new offshore oil and gas extraction 

facilities may be required to submit the 

Source Water Baseline Biological 

Characterization Data depending on 

whether they are fixed or non-fixed 

facilities. Non-fixed facilities would be 

exempt from the requirement. Specific 

data requirements for the Source Water 

Baseline Biological Characterization 

Data are described later in this section. 

Studies to be submitted by both Phase 

III existing facilities and new offshore 

oil and gas extraction facilities are 

described below. 

1. Source Water Physical Data 

(§ 122.21(r)(2)) 

Under the requirements at § 122.21, 

Phase III existing facilities and new 

offshore oil and gas extraction facilities 

subject to this proposed rule are 

required to provide the source water 

physical data specified at § 122.21(r)(2) 

in their application for a reissued 

permit. These data are needed to 

characterize the facility and evaluate the 

type of waterbody and species 

potentially affected by the cooling water 

intake structure. The Director would use 

this information to evaluate the 

appropriateness of the design and 

construction technologies proposed by 

the applicant.

The applicant for an existing facility 

or a new fixed offshore oil and gas 

extraction facility would be required to 

submit the following specific data: (1) A 

narrative description and scale drawings 

showing the physical configuration of 

all source waterbodies used by the 

facility, including areal dimensions, 

depths, salinity and temperature 

regimes, and other documentation; (2) 

an identification and characterization of 

the source waterbody’s hydrological and 

geomorphological features, as well as 

the methods used to conduct any 

physical studies to determine the 

intake’s zone of influence and the 

results of such studies; and (3) 

locational maps. For new non-fixed 

(mobile) offshore oil and gas extraction 

facilities this provision requires only 

some of the location information and 

not the source water physical data 

required for Phase III existing facilities 

and new fixed offshore oil and gas 

extraction facilities. 

EPA recognizes that mobile facilities 

may not always know where they will 

be operating during the permit term, 

and the requirement in (r)(2)(iv) is not 

meant to restrict them only to locations 

identified in the permit application. 

However, EPA expects that permit 

applicants will provide, based on 

available information, their best 

estimate as to where they will be 

operating during the permit term, at 

whatever level of detail they can. EPA 

requests comment on this requirement. 

2. Cooling Water Intake Structure Data 

(§ 122.21(r)(3)) 

Phase III existing facilities and new 

offshore oil and gas extraction facilities 

would be required to submit the cooling 

water intake structure data specified at 

§ 122.21(r)(3) to characterize the cooling 

water intake structure and evaluate the 

potential for impingement and 

entrainment of aquatic organisms. Note 

that § 122.21(r)(3)(ii)—latitude and 

longitude of each intake structure—

would not be applicable to non-fixed 

(mobile) offshore oil and gas extraction 

facilities. Information on the design of 

the intake structure and its location in 

the water column would allow the 

permit writer to evaluate which species 

or life stages would potentially be 

subject to impingement mortality and 

entrainment. A diagram of the facility’s 

water balance would be used to identify 

the proportion of intake water used for 

cooling, make-up, and process water. 

The water balance diagram also 

provides a picture of the total flow in 

and out of the facility, allowing the 

permit writer to evaluate compliance 

with the performance standards or 

requirements. 

The applicant would be required to 

submit the following specific data: (1) A 

narrative description of the 

configuration of each of its cooling 

water intake structures and where they 

are located in the waterbody and in the 

water column; (2) latitude and longitude 

in degrees, minutes, and seconds for 

each of its cooling water intake 

structures (not applicable to new nonfixed (mobile) offshore oil and gas 

extraction facilities); (3) a narrative 

description of the operation of each of 

the cooling water intake structures, 

including design intake flows, daily 

68480 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

hours of operation, number of days of 

the year in operation, and seasonal 

operation schedules, if applicable; (4) a 

flow distribution and water balance 

diagram that includes all sources of 

water to the facility, recirculating flows, 

and discharges; and (5) engineering 

drawings of the cooling water intake 

structure. 

3. Cooling Water System Description 

(§ 122.21(r)(5)) (Phase III Existing 

Facilities Only) 

Phase III existing facilities would be 

required to submit the cooling water 

system data specified at § 122.21(r)(5) to 

characterize the operation of cooling 

water systems and their relationship to 

the cooling water intake structure(s) at 

the facility. They would also be required 

to submit a narrative description of the 

proportion of design intake flow that is 

used in the system, the number of days 

of the year that the cooling water system 

is in operation, and any seasonal 

changes in the operation of the system, 

if applicable. The facility would also 

submit design and engineering 

calculations prepared by a qualified 

expert, such as a professional engineer, 

and supporting data to support the 

narrative description. This information 

would be expected to be used by the 

applicant and the Director in 

determining the appropriate standards 

that can be applied to the Phase III 

facility. 

C. Phase III Existing Facility 

Implementation 

In this proposed rule, a Phase III 

existing facility as defined by any of the 

three co-proposed options would choose 

one of the following five compliance 

alternatives for establishing best 

technology available for minimizing 

adverse environmental impact at the site 

(see § 125.103(a)(1–5)): 

(1) Demonstrate that it has reduced its 

flow commensurate with a closed-cycle 

recirculating system and therefore 

already meets the performance 

standards to reduce impingement 

mortality and entrainment. Or, a facility 

may demonstrate that it has already 

reduced its design intake velocity to 0.5 

feet per second and therefore meets the 

performance standards to reduce 

impingement mortality only; 

(2) Demonstrate that existing design 

and construction technologies, 

operational measures, and/or restoration 

measures already meet the performance 

requirements specified under 

§ 125.103(b) and the restoration 

requirements in (c), as applicable; 

(3) Demonstrate that it has selected 

and installed design and construction 

technologies, operational measures, 

and/or restoration measures that will, in 

combination with any existing design 

and construction technologies, 

operational measures, and/or restoration 

measures, meet the performance 

standards specified under § 125.103(b) 

and the restoration requirements 

specified in § 125.103(c), as applicable; 

(4) Demonstrate that it has installed 

and properly operates and maintains an 

approved design and construction 

technology in accordance with 

§ 125.108(a); or propose a technology for 

approval in accordance with 

§ 125.108(b); or, 

(5) Demonstrate that a site-specific 

determination of best technology 

available for minimizing adverse 

environmental impact is appropriate for 

its site in accordance with 

§ 125.103(a)(5). 

The application, monitoring, record 

keeping, and reporting requirements for 

each of these compliance alternatives 

are detailed in the following sections.

1. As an Existing Phase III Facility, 

What Additional Information Would I 

Submit to the Director When I Apply for 

My Reissued NPDES Permit? 

In addition to § 122.21 described 

above, the facility would be required to 

submit the information required under 

§ 125.104, as appropriate. This 

information includes the 

Comprehensive Demonstration Study 

and its seven components as discussed 

in this section. The seven components 

include the following: Proposal for 

Information Collection; Source 

Waterbody Flow Information; 

Impingement Mortality and/or 

Entrainment Characterization Study; 

Technology Compliance and 

Assessment Information; Restoration 

Plan; Information to Support Sitespecific Determination of Best 

Technology Available for Minimizing 

Adverse Environmental Impact; and 

Verification Monitoring Plan. 

Under today’s proposed rule, if a 

Phase III existing facility’s permit 

expires before 4 years after the 

publication date of the final rule, the 

facility may request that the Director 

establish a schedule for the facility to 

submit the information required as 

expeditiously as practicable, but not 

later than 3 years and 180 days after 

publication of the final rule. Between 

the time the facility’s existing permit 

expires and the time an NPDES permit 

containing requirements consistent with 

Subpart K is issued to the facility, the 

best technology available to minimize 

adverse environmental impact would 

continue to be based on the Director’s 

best professional judgment. 

The Proposal for Information 

Collection component of § 125.104 

should be submitted to the Director for 

review and comment prior to the start 

of information collection activities. For 

a typical facility that plans to install a 

new technology, it is estimated that a 

facility would need to submit this 

Proposal for Information Collection 

about fifteen (15) months prior to the 

submission of the remainder of the 

required information, which in turn 

would need to be submitted about 

twenty-one (21) months prior to the 

expiration of its current permit. This 

approximate timing is based on the 

sequential Comprehensive 

Demonstration Study requirements and 

the estimated level of effort required to 

complete the studies and allow time for 

the Director’s review and approval. The 

timing provided in this section is for 

illustrative purposes only and 

represents a schedule that the average 

facility may need to follow to meet the 

deadlines established in today’s 

proposed rule. Some facilities may 

require more, or less time to perform the 

studies and prepare the application 

requirements. All facilities, except those 

that choose to comply with the 

proposed rule by reducing intake 

capacity to a level commensurate with 

a closed-cycle recirculating system in 

accordance with § 125.103(a)(1)(i), or by 

adopting an approved technology in 

accordance with § 125.103(a)(4) would 

submit a Proposal for Information 

Collection for review and comment by 

the Director (§ 125.104(a)(1)). Facilities 

that comply with impingement 

mortality requirements by reducing 

intake velocity to 0.5 feet per second or 

less in accordance with 

§ 125.103(a)(1)(ii) will only need to 

submit a Comprehensive Demonstration 

Study, including a Proposal for 

Information Collection, for entrainment 

reduction requirements, if applicable. 

The Proposal for Information Collection 

requirements are detailed later in this 

section. Figure 1 presents an example of 

a possible time frame a facility may 

follow in preparing and submitting 

application components. 

Following submission of the Proposal 

for Information Collection, the Director 

will review and provide comments on 

the proposal. During this time, the 

facility may proceed with planning, 

assessment, and data collection 

activities in fulfillment of 

Comprehensive Demonstration Study 

requirements. The Director is 

encouraged to provide comments 

expeditiously (i.e., within 60 days) so 

the permit applicant can make 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68481

responsive modifications to its 

information gathering activities. 

BILLING CODE 6560–50–P

BILLING CODE 6560–50–C


EP24no04.000</GPH>
68482 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

It is assumed that most facilities 

would need approximately one year to 

complete the studies outlined in the 

Proposal for Information Collection. 

These would be completed at least 180 

days prior to the end of the current 

permit term, by which time the 

remainder of required application 

information would be submitted. If the 

facility believed it would require more 

than one year to complete studies 

described in the Proposal for 

Information Collection, the facility 

would be encouraged to consult with 

the Director. 

After the first permit containing 

requirements consistent with Subpart K 

is issued, facilities may submit a request 

to their Director soliciting a reduced 

information collection effort for 

subsequent permit applications in 

accordance with § 125.104(a)(3), which 

allows facilities to demonstrate that the 

conditions at their facility and within 

the waterbody in which their intake is 

located remain substantially unchanged 

since their previous permit application. 

The request for reduced cooling water 

intake structure and waterbody 

application information would contain a 

list of and justification for each 

information item in § 122.21(r) and 

§ 125.104(b) that has not changed since 

the previous permit application. The 

applicant would submit this request at 

least one year prior to the expiration of 

the current permit term and the Director 

is required to act on the request within 

60 days. 

The Director would review the 

information provided in the application 

including the information submitted in 

compliance with § 122.21 and § 125.104 

and would confirm whether the facility 

should be regulated as an existing 

facility under these proposed 

regulations or as a new facility under 

regulations that were published on 

December 19, 2001 (66 FR 65256), and 

establish the appropriate requirements 

to be applied to the cooling water intake 

structure(s). Following review and 

approval of the permit application, the 

Director would develop a draft permit 

for public notice and comment. The 

comment period would allow the 

facility and other interested parties to 

review the draft permit conditions and 

provide comments to the Director. The 

Director would consider all public 

comments received on the draft permit 

and would develop a final permit based 

upon the application studies submitted 

and other information submitted during 

the comment period, as appropriate. 

The Director would incorporate the 

relevant requirements for the facility’s 

cooling water intake structure(s) into the 

final permit. 

The information required under 

§ 125.104 would be identical under each 

of the three co-proposed regulatory 

options, with one exception. Under the 

regulatory option which defines 

facilities with design intakes flows 100 

MGD or more located on tidal rivers, 

estuaries, or oceans or one of the Great 

Lakes as existing Phase III facilities, 

there would not be a requirement to 

collect the Source Waterbody Flow 

information described below, because 

this information is only relevant for 

facilities withdrawing water from 

freshwater rivers and streams or lakes 

and reservoirs. In addition, under this 

regulatory option there would not be 

any facilities required to meet only 

impingement mortality performance 

standards. Therefore, under this 

regulatory option all facilities except 

those that have met the applicable 

requirements in accordance with 

§ 125.103(a)(1)(i) or § 125.103(a)(4) 

would be required to submit a Study for 

both the impingement mortality and 

entrainment reduction requirements, 

unless the facility had met the 

applicable requirements in 

§ 125.103(a)(1)(ii), in which case it 

would be required to submit a Study for 

entrainment only. The following 

describes the proposed application 

requirements in more detail. 

a. Comprehensive Demonstration Study 

(§ 125.104(b)) 

Proposed application requirements at 

§ 125.104 would require all existing 

facilities except those deemed to have 

met the performance standard in 

§ 125.103(a)(1) (reduced intake capacity 

to a level commensurate with the use of 

a closed-cycle, recirculating cooling 

water system, or for facilities with 

impingement requirements only, reduce 

intake velocity to 0.5 feet per second or 

less) to perform and submit to the 

Director the results of a Comprehensive 

Demonstration Study, including data 

and detailed analyses to demonstrate 

that the facility will meet applicable 

requirements contained in § 125.103(b) 

or established pursuant to 

§ 125.103(a)(5). 

The proposed Comprehensive 

Demonstration Study has seven 

components. 

• Proposal for Information Collection; 

• Source Waterbody Flow 

Information; 

• Impingement Mortality and/or 

Entrainment Characterization Study; 

• Technology and Compliance 

Assessment Information; 

• Restoration Plan; 

• Information to Support Site-specific 

Determination of Best Technology 

Available for Minimizing Adverse 

Environmental Impact; and 

• Verification Monitoring Plan.

All Phase III existing facilities would 

not be required to submit each of these 

components of the Comprehensive 

Demonstration Study. Rather, required 

submittals for a facility would depend 

on the compliance alternative selected. 

All Phase III existing facilities, except 

those deemed to have met the 

performance standard in accordance 

with § 125.103(a)(1) or § 125.103(a)(4), 

would be required to submit a Proposal 

for Information Collection; Source 

Waterbody Flow Information whenever 

the intake is on a freshwater river or 

stream or a lake or reservoir; an 

Impingement Mortality and/or 

Entrainment Characterization Study; 

Technology and Compliance 

Assessment Information; and a 

Verification Monitoring Plan. Facilities 

complying in accordance with 

§ 125.103(a)(4) would be required to 

submit Technology and Compliance 

Assessment Information and a 

Verification Monitoring Plan. Only 

those Phase III existing facilities that 

propose to use restoration measures in 

whole or in part to meet the 

performance standards in § 125.103(b) 

or site-specific requirements in 

§ 125.103(a)(5) would be required to 

submit a Restoration Plan. Only those 

facilities that choose to demonstrate that 

a site-specific standard is appropriate 

for their site would be required to 

submit Information to Support Sitespecific Determination of Best 

Technology Available for Minimizing 

Adverse Environmental Impact. 

Proposal for Information Collection 

(§ 125.104(a)) 

Before conducting any studies, the 

facility would be required to submit to 

the Director for review and approval, a 

proposal stating what information 

would be collected to support the 

Comprehensive Demonstration Study 

(see § 125.104(b)(1)). This proposal 

would provide: (1) A description of the 

proposed and/or implemented 

technology(ies) and/or supplemental 

restoration measures to be evaluated; (2) 

a list and description of any historical 

studies characterizing impingement 

mortality and entrainment and/or the 

physical and biological conditions in 

the vicinity of the cooling water intake 

structures and their relevance to this 

proposed study. If the facility proposes 

to use existing data, it would 

demonstrate the extent to which the 

data are representative of current 

conditions and that the data were 

collected using appropriate quality 

assurance/quality control procedures; 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68483

(3) a summary of any past or ongoing 

(including voluntary) consultations with 

appropriate Federal, State, and Tribal 

fish and wildlife agencies that are 

relevant to this study and a copy of 

written comments received as a result of 

such consultation; and (4) a sampling 

plan for any new field studies proposed 

to be conducted in order to ensure that 

the facility has sufficient data to 

develop a scientifically valid estimate of 

impingement mortality and entrainment 

at the site. The sampling plan would 

document all methods and quality 

assurance/quality control procedures for 

sampling and data analysis. The 

sampling and data analysis methods 

proposed would be appropriate for a 

quantitative survey and would take into 

account the methods used in other 

studies performed in the source 

waterbody. The sampling plan would 

include a description of the study area 

(including the area of influence of the 

cooling water intake structure), and 

provide taxonomic identifications of the 

sampled or evaluated biological 

assemblages (including all life stages of 

fish and shellfish). 

The proposed rule does not specify 

particular timing requirements for the 

information collection proposal, but 

does require review of the proposal by 

the Director. In general, EPA expects 

that it would be submitted well in 

advance of the other permit application 

materials, so that if the Director 

determined that additional information 

was needed to support the application, 

the facility would have time to collect 

this information, including additional 

monitoring as appropriate. In some 

cases, however, where the facility 

intends to rely on existing data and 

there has been no change in conditions 

at the site since the last permit renewal, 

a long lead time might not be necessary. 

This would most likely be the case for 

subsequent permit renewals following 

the first renewal after the Phase III 

requirements go into effect. 

Source Waterbody Flow Information 

Facilities under the co-proposed 

regulatory option that defines existing 

Phase III facilities as those with design 

intakes flows 100 MGD or more located 

on tidal rivers, estuaries, or oceans, or 

one of the Great Lakes would not have 

a requirement to submit Source 

Waterbody Flow Information. Under 

either of the other co-proposed options, 

Phase III existing facilities with cooling 

water intake structures that withdraw 

cooling water from freshwater rivers or 

streams, except those deemed to have 

met the performance standard in 

§ 125.103(b) (in accordance with 

125.103(a)(1)(i)), would be required to 

provide the mean annual flow of the 

waterbody and any supporting 

documentation and engineering 

calculations that allow a determination 

of whether they are withdrawing less 

than or greater than five (5) percent of 

the annual mean flow. This would 

provide information needed to 

determine which requirements would 

apply to the facility (see § 125.103(b)(1) 

and (2)). Facilities seeking compliance 

in accordance with § 125.103(a)(1)(ii) 

would need this information to 

determine whether they have 

impingement mortality and entrainment 

requirements, or impingement mortality 

requirements only. The documentation 

might include either publicly available 

flow data from a nearby U.S. Geological 

Survey (USGS) gauging station or actual 

instream flow monitoring data collected 

by the facility. The waterbody flow 

should be compared with the total 

design flow of all cooling water intake 

structures at the regulated facility. 

Under the proposed requirements at 

§ 125.103(b)(3), Phase III existing 

facilities with cooling water intake 

structures that withdraw cooling water 

from a lake or reservoir and that propose 

to increase the facility’s design intake 

flow would be required to submit a 

narrative description of the waterbody’s 

thermal stratification and any 

supporting documentation and 

engineering calculations to show that 

the increased flow meets the 

requirement not to disrupt the natural 

thermal stratification or turnover pattern 

(where present) of the source water 

except in cases where the disruption is 

determined, in consultation with 

Federal, State or Tribal fish and wildlife 

management agencies, to not adversely 

affect the management of fisheries. 

Typically, this natural thermal 

stratification would be defined by the 

thermocline, which may be affected to 

a certain extent by the withdrawal of 

cooler water and the discharge of heated 

water into the system. In cases where 

the lake or reservoir remains stratified, 

the Director may also consider changes 

in the relative size of the water layers 

due to the changes in withdrawals and 

any subsequent impacts (e.g., change in 

dissolved oxygen, change in available 

habitat). 

Impingement Mortality and/or 

Entrainment Characterization Study

The proposed regulations would 

require that the facility submit the 

results of an Impingement Mortality 

and/or Entrainment Characterization 

Study in accordance with § 125.104(b). 

This study would include: (1) 

Taxonomic identifications of those 

species of fish and shellfish and their 

life stages that are in the vicinity of the 

cooling water intake structure and are 

most susceptible to impingement and 

entrainment; (2) a characterization of 

these species of fish and shellfish and 

life stages, including a description of the 

abundance and temporal/spatial 

characteristics in the vicinity of the 

cooling water intake structure, based on 

the collection of a sufficient number of 

years of data to characterize annual, 

seasonal, and diel variations in 

impingement mortality and entrainment 

(e.g., related to climate/weather 

differences, spawning, feeding and 

water column migration); and (3) 

documentation of the current 

impingement mortality and entrainment 

of all life stages of fish and shellfish at 

the facility and an estimate of 

impingement mortality and entrainment 

under the calculation baseline. 

This documentation would include 

historical data that are representative of 

the current operation of the facility and 

of biological conditions at the site. 

Impingement mortality and entrainment 

samples to support the calculations 

required would be collected during 

periods of representative operational 

flows for the cooling water intake 

structure and the flows associated with 

the samples would be documented. In 

addition, this study would include an 

identification of species that are 

protected under Federal, State, or Tribal 

law (including threatened or 

endangered species) that might be 

susceptible to impingement and 

entrainment by the cooling water intake 

structure(s). The Director might 

coordinate a review of the list of 

threatened, endangered, or other 

protected species with the U.S. Fish and 

Wildlife Service, National Marine 

Fisheries Service, or other relevant 

agencies to ensure that potential 

impacts to these species have been 

addressed. 

The calculation baseline is defined at 

§ 125.102 as an estimate of impingement 

mortality and entrainment that would 

occur at the site assuming: (1) The 

cooling water intake system has been 

designed as a once-through system; (2) 

the opening of the cooling water intake 

structure is located at, and the face of 

the standard 3⁄8inch mesh traveling 

screen is oriented parallel to, the 

shoreline near the surface of the source 

waterbody; and (3) the baseline 

practices, procedures, and structural 

configuration are those that the facility 

would maintain in the absence of any 

structural or operational controls, 

including flow or velocity reductions, 

implemented in whole or in part for the 

purposes of reducing impingement 

mortality and entrainment. The facility 

68484 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

may also choose to use its current level 

of impingement mortality and 

entrainment as the calculation baseline. 

EPA has previously referred to this as 

the ‘‘as-built approach’’ (69 FR 41576). 

Reductions in impingement mortality 

and entrainment from the calculation 

baseline as a result of any design and 

construction technologies and/or 

operational measures already 

implemented at the facility should be 

added to the reductions expected to be 

achieved by any additional design and 

construction technologies and 

operational measures that will be 

implemented in order to meet the 

applicable performance standards or 

site-specific requirements. In this case, 

the calculation baseline could be 

estimated by evaluating existing data 

from a facility nearby without 

impingement and/or entrainment 

control technology (if relevant) or by 

evaluating the abundance of organisms 

in the source waterbody in the vicinity 

of the intake structure that may be 

susceptible to impingement and/or 

entrainment. Additionally, if a portion 

of the total design intake flow is water 

withdrawn for a closed-cycle, 

recirculating cooling system (but flow is 

not sufficiently reduced to satisfy the 

compliance option in § 125.103(a)(1)(i)), 

such facilities would be able to use the 

reduction in impingement mortality and 

entrainment that is attributed to the 

reduction in flow in meeting the 

performance requirements in § 125.103. 

The calculation baseline may be 

estimated using: historical impingement 

mortality and entrainment data from the 

facility or from another facility with 

comparable design, operational, and 

environmental conditions; current 

biological data collected in the 

waterbody in the vicinity of the cooling 

water intake structure; or current 

impingement mortality and entrainment 

data collected at the facility. A facility 

could also request that the calculation 

baseline be modified to be based on a 

location of the opening of the cooling 

water intake structure at a depth other 

than at or near the surface if it can 

demonstrate to the Director that the 

other depth would correspond to a 

higher baseline level of impingement 

mortality and/or entrainment. 

Technology and Compliance 

Assessment Information 

The Technology and Compliance 

Assessment Information required under 

§ 125.104(b)(4) consists of two parts: (1) 

The Design and Construction 

Technology Plan; and (2) the 

Technology Installation and Operation 

Plan. If a facility plans to utilize the 

compliance alternative in 

§ 125.103(a)(4), it need only submit the 

Technology Installation and Operation 

Plan (and the Verification Monitoring 

Plan under § 125.104(b).) If the facility 

plans to utilize the compliance 

alternative in § 125.103(a)(2) or (3) using 

design and construction technologies 

and/or operational measures (either 

existing or new), it would submit both 

the Design and Construction 

Technology Plan and the Technology 

Installation and Operation Plan. Note 

that facilities seeking a site-specific 

determination of best technology 

available in accordance with 

§ 125.103(a)(5), would submit a SiteSpecific Technology Plan in accordance 

with § 125.104(b) rather than a Design 

and Construction Technology Plan, as 

well as a Technology Installation and 

Operation Plan and the other studies 

discussed later in section VII.C.5, 

Alternative Site-Specific Requirements.

The Design and Construction 

Technology Plan would explain the 

technologies or operational measures 

selected by a facility to meet the 

requirements in § 125.103(a)(2) or (3). 

The Agency recognizes that selection of 

the specific technology or group of 

technologies for the site will depend on 

individual facility and waterbody 

conditions. Examples of appropriate 

technologies may include, but are not 

limited to, wedgewire screens, fine 

mesh screens, fish handling and return 

systems, barrier nets, aquatic filter 

barrier systems, and enlargement of the 

cooling water intake structure to reduce 

velocity. Examples of operational 

measures include, but are not limited to, 

seasonal shutdowns or reductions in 

flow, and continuous or more frequent 

rotation of traveling screens. 

Information required as part of the 

Design and Construction Technology 

Plan would include the following: (1) A 

narrative description of the design and 

operation of all design and construction 

technologies and/or operational 

measures that have been or will be put 

into place to meet the performance 

standards for reduction of impingement 

mortality of those species most 

susceptible to impingement, and 

information that demonstrates the 

efficacy of those technologies and/or 

operational measures for those species; 

(2) a description of the design and 

operation of all design and construction 

technologies or operational measures 

that have been or will be put into place, 

to meet the performance standards for 

reduction of entrainment for those 

species most susceptible to entrainment, 

if applicable to the facility, and 

information that demonstrates the 

efficacy of those technologies and/or 

operational measures for those species; 

(3) calculations of the reduction in 

impingement mortality and/or 

entrainment of all life stages of fish and 

shellfish that would be achieved by the 

technologies and/or operational 

measures selected based on the 

Impingement Mortality and/or 

Entrainment Characterization Study in 

§ 125.104(b); and (4) design and 

engineering calculations, drawings, and 

estimates to support the narrative 

descriptions required in the Design and 

Construction Technology Plan prepared 

by a qualified expert such as a 

professional engineer. 

In determining compliance with any 

requirements to reduce impingement 

mortality or entrainment, the facility 

would assess the total reduction in 

impingement mortality and entrainment 

against the calculation baseline 

developed under the Impingement 

Mortality and/or Entrainment 

Characterization Study. 

Under the Phase II final rule, power 

producing facilities with a capacity 

utilization rate of less than 15 percent 

are only required to meet the 

impingement mortality reduction 

requirements, based on EPA’s 

determination that entrainment impacts 

below this threshold would be minimal. 

EPA defined the capacity utilization rate 

as the ratio between the average annual 

net generation of the power by the 

facility (in MW) and the total net 

capability of the facility to generate 

power (in MW) multiplied by the 

number of available hours during a year. 

Today’s proposed rule does not contain 

an analogous provision for 

manufacturing facilities, as EPA has 

been unable to identify a similar 

threshold of operations below which 

impacts would be considered minimal. 

EPA requests comment on the 

availability of such a threshold that 

would result in lesser requirements for 

facilities that do not operate full time, 

thus minimizing burdens to these 

facilities while still protecting the 

source waterbody. 

The Technology Installation and 

Operation Plan is required for all 

facilities that choose the compliance 

alternatives in § 125.103(a)(2), (3), (4), or 

(5), and propose to use design and 

construction technologies and/or 

operational measures (either existing or 

new) to meet performance standards or 

site specific requirements. Such 

facilities would submit the following 

information to the Director for review 

and approval: (1) A schedule for the 

installation and maintenance of any 

new design and construction 

technologies; (2) a list of the operational 

parameters that will be monitored, 

including the location and the 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68485

frequency at which they will be 

monitored; (3) a list of activities to be 

undertaken to ensure to the degree 

practicable the efficacy of the installed 

design and construction technologies 

and operational measures, and the 

schedule for implementing them; (4) a 

schedule and methodology for assessing 

the efficacy of any installed design and 

construction technologies and 

operational measures in achieving 

applicable performance standards, 

including an adaptive management plan 

for revising design and construction 

technologies and/or operational 

technologies if the assessment indicates 

that applicable performance standards 

are not being met; and (5) for facilities 

that select an approved technology in 

accordance with § 125.103(a)(4), 

documentation that appropriate site 

conditions (as specified by EPA or the 

Director in accordance with § 125.108) 

exist at the facility. In developing the 

schedule for installation and 

maintenance of any new design and 

construction technologies in item 1, the 

facility should schedule any downtime 

to coincide with otherwise necessary 

downtime (e.g., for repair, overhaul, or 

routine maintenance of the) to the 

extent practicable. The Director should 

approve any reasonable scheduling 

provision included for this purpose. 

Those facilities that propose to use 

restoration measures in whole or in part 

would submit the Restoration Plan 

required at § 125.104(b)(5). 

Today’s proposed rule would require 

the Director to evaluate, using 

information submitted in the 

application, biennial status reports, and 

any other available information, the 

performance of any technologies, 

operational measures, and/or restoration 

measures the facility may have 

implemented in previous permit terms. 

Additional or different design and 

construction technologies, operational 

measures, and/or restoration measures 

may be required if the Director 

determines that the initial technologies, 

operational measures, and/or restoration 

measures selected and implemented 

will not meet the requirements of 

§ 125.103, as provided in § 125.107. The 

proposed rule also requires that the 

permit contain a condition requiring the 

facility to reduce impingement mortality 

and entrainment (if applicable) 

commensurate with the efficacy of the 

installed design and construction 

technologies and/or operational 

measures. This is designed to ensure 

that technologies are operated and 

maintained to ensure their efficacy to 

the degree practicable, and not merely 

to meet the low end of the applicable 

performance standard range, if better 

performance is practicable.

The Technology Installation and 

Operation Plan is one of the most 

important pieces of documentation for 

implementing the requirements of this 

proposed rule. It serves to: (1) Guide 

facilities in the installation, operation, 

maintenance, monitoring, and adaptive 

management of selected design and 

construction technologies and/or 

operational measures; (2) provide a 

schedule and methodology for assessing 

success in meeting applicable 

performance standards and site-specific 

requirements; and (3) provide a basis for 

determining compliance with the 

requirements of § 125.103(a)(2)–(5). 

Facilities and Directors are encouraged 

to take appropriate care in developing, 

reviewing and approving the plan. Note 

that for facilities employing restoration 

measures, the Restoration Plan serves 

the same required functions. 

Restoration Plan 

EPA proposes restoration measures as 

one of several technologies that may be 

employed, alone or in combination with 

others, to minimize adverse 

environmental impact at existing 

facilities. The consideration of 

restoration measures is relevant to the 

section 316(b) determination of the 

requisite design of cooling water intake 

structures because restoration measures 

help minimize the adverse 

environmental impact attributable to 

such structures. Phase III existing 

facilities may use restoration measures 

that produce and/or result in levels of 

fish and shellfish in the facility’s 

waterbody or watershed that are 

substantially similar to those that would 

result through compliance with the 

applicable performance standards or 

alternative site-specific requirements. In 

order to employ restoration measures, 

the facility would demonstrate to the 

Director that it has evaluated the use of 

design and construction technologies 

and/or operational measures and 

determined that the use of restoration 

measures is appropriate because 

meeting the applicable performance 

standards or site-specific requirements 

through the use of design and 

construction technologies and/or 

operational measures alone is less 

feasible, less cost-effective or less 

environmentally desirable than meeting 

the standards in whole or in part 

through the use of restoration measures. 

Facilities would also demonstrate to the 

Director that the restoration measures, 

alone or in combination with any 

selected design and construction 

technologies and/or operational 

measures, will produce ecological 

benefits and maintain fish and shellfish 

in the waterbody, including community 

structure and function, at a substantially 

similar level to that which would be 

achieved by meeting the applicable 

performance standards at § 125.103(b) or 

the site-specific requirements developed 

pursuant to § 125.103(a)(5). 

To help all parties review the 

proposed or existing restoration 

measures and to help ensure adequate 

performance of those measures, 

§ 125.104(b) would require facilities 

proposing to use restoration measures to 

submit the following information in a 

Restoration Plan with their applications 

to the Director for review and approval. 

In the submittal, the facility would 

address species identified, in 

consultation with Federal, State, and 

Tribal fish and wildlife management 

agencies with responsibility for fisheries 

and wildlife potentially affected by the 

facility’s cooling water intake structures, 

as species of concern. The level of 

complexity of the Restoration Plan 

likely will be commensurate with the 

restoration measures considered or 

proposed.

First, the facility would be required to 

demonstrate that it has evaluated the 

use of design and construction 

technologies and/or operational 

measures and explain how it 

determined that the use of restoration 

measures would be more feasible, costeffective, or environmentally desirable 

than meeting the applicable 

performance standards or site-specific 

requirements wholly through the use of 

design and construction technologies, 

and/or operational measures. 

Second, the facility would be required 

to submit a narrative description of the 

design and operation of all restoration 

measures the facility has in place or has 

selected and proposes to implement to 

produce fish and shellfish. If the 

ecological benefits from an existing 

restoration project are required to 

compensate for some environmental 

impact other than the impact from 

impingement and entrainment by the 

cooling water intake structure (e.g., a 

wetland created to satisfy section 404 of 

the Clean Water Act requirements), 

those ecological benefits should not be 

counted towards meeting the applicable 

performance standards or site-specific 

requirements. The narrative description 

should identify the species targeted 

under any restoration measures. 

Third, the facility would be required 

to submit a quantification of the 

ecological benefits of the existing and/

or proposed restoration measures. The 

facility would estimate the reduction in 

fish and shellfish impingement 

mortality and entrainment that would 

68486 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

be necessary to comply with applicable 

performance standards or site-specific 

requirements, using information from 

the Impingement Mortality and/or 

Entrainment Characterization Study and 

any other available and appropriate 

information. The facility would then 

calculate the production of fish and 

shellfish from existing and proposed 

restoration measures. The quantification 

would also include a discussion of the 

nature and magnitude of uncertainty 

associated with the performance of the 

restoration measures and a discussion of 

the time frame within which ecological 

benefits are expected to accrue from the 

restoration project. 

Fourth, the facility would be required 

to provide design calculations, 

drawings, and estimates documenting 

that the proposed restoration measures, 

in combination with design and 

construction technologies and/or 

operational measures, or alone, will 

meet the requirements for production of 

fish and shellfish. Production of fish 

and shellfish as a result of relevant 

restoration measures already 

implemented at the facility should be 

added to the production expected to be 

achieved by the additional restoration 

measures. If the restoration measures 

address the same fish and shellfish 

species identified in the Impingement 

Mortality and/or Entrainment 

Characterization Study (in-kind 

restoration), the facility would be 

required to demonstrate that the 

restoration measures will produce a 

level of these fish and shellfish 

substantially similar to that which 

would result from meeting applicable 

performance standards or site-specific 

requirements. In this case, the 

calculations should include a sitespecific evaluation of the suitability of 

the restoration measures based on the 

species that are found at the site. If the 

restoration measures address fish and 

shellfish species different from those 

identified in the Impingement Mortality 

and/or Entrainment Characterization 

Study (out-of-kind restoration), the 

facility would be required to 

demonstrate that the restoration 

measures produce ecological benefits 

substantially similar to or greater than 

those that would be realized through inkind restoration. Such a demonstration 

should be based on a watershed 

approach to restoration planning and 

consider applicable multi-agency 

watershed restoration plans, sitespecific peer-reviewed ecological 

studies, and/or consultation with 

appropriate Federal, State, and Tribal 

natural resource agencies. While both 

in-kind and out-of-kind restoration 

require a quantification of the levels of 

fish and shellfish the restoration 

measures are expected to produce, outof-kind restoration could include a 

qualitative demonstration that these 

ecological benefits are substantially 

similar to or greater than those that 

would be realized through in-kind 

restoration, because different species are 

being produced that may not be directly 

comparable to those identified in the 

Impingement Mortality and/or 

Entrainment Characterization Study. 

The Director could require additional 

information from the facility in order to 

assess the results of the out-of-kind 

restoration (e.g., biological data on 

species present, function of species in 

the community, etc.). 

Fifth, the facility would be required to 

submit a plan utilizing an adaptive 

management method for implementing, 

maintaining, and demonstrating the 

efficacy of the restoration measures it 

has selected and for determining the 

extent to which restoration measures, or 

the restoration measures in combination 

with design and construction 

technologies and operational measures, 

have met the applicable performance 

standards or site-specific requirements. 

Adaptive management is a process in 

which a facility chooses an approach for 

meeting a project goal, monitors the 

effectiveness of that approach, and then, 

based on monitoring and any other 

available information, makes any 

adjustments necessary to ensure 

continued progress toward the project’s 

goal. This cycle is repeated as necessary 

until the goal is met.

The adaptive management plan would 

include: (1) A monitoring plan that 

includes a list of the restoration 

parameters that the facility will monitor, 

the frequency at which they will be 

monitored, and the success criteria for 

each parameter; (2) a list of activities the 

facility will undertake to ensure the 

efficacy of the restoration measures, a 

description of the linkages between 

these activities and the items described 

in the monitoring plan, and an 

implementation schedule for the 

activities; and (3) a process for revising 

the restoration plan as new information, 

including monitoring data, becomes 

available, and if the applicable 

performance standards or site-specific 

requirements are not being met. 

Sixth, the facility would be required 

to submit a summary of any past or 

ongoing consultation with Federal, 

State, and Tribal fish and wildlife 

management agencies on its use of 

restoration measures, including any 

written comments received as a result of 

such consultations. 

Seventh, if requested by the Director, 

the facility would be required to 

conduct a peer review of items to be 

submitted as part of the Restoration 

Plan. Written comments from peer 

reviewers would be submitted to the 

Director and made available to the 

public as part of the permit application. 

Peer reviewers would be selected in 

consultation with the Director who may 

consult with EPA, and with Federal, 

State and Tribal fish and wildlife 

management agencies with 

responsibility for fish and wildlife 

potentially affected by the facility’s 

cooling water intake structure(s). Peer 

reviewers would be required to have 

appropriate qualifications (e.g., in the 

fields of geology, engineering and/or 

biology) depending upon the materials 

to be reviewed. 

Finally, the facility would be required 

to include in the Plan a description of 

information to be included in a status 

report to the Director every two years. 

The proposed regulations at § 125.107(b) 

would require that this information be 

reviewed by the Director to determine 

whether the proposed restoration 

measures, in conjunction with (or in 

lieu of) design and construction 

technologies and/or operational 

measures, would meet the applicable 

performance standards or site-specific 

requirements, or, if the restoration is 

out-of-kind, would produce 

substantially similar ecological benefits 

(fish and shellfish) including 

maintenance or protection of 

community structure and function in 

the facility’s waterbody or watershed. 

Compliance Using an Approved 

Technology 

Today’s proposed rule would offer 

facilities the choice of adopting a 

protective, pre-approved design and 

construction technology, which would 

allow them to submit a significantly 

streamlined Comprehensive 

Demonstration Study. Section 125.108 

lists one approved technology 

(wedgewire screens) and provides an 

opportunity for the Director to preapprove other technologies. 

If the facility chooses to comply with 

this compliance alternative, the facility 

would submit documentation to the 

Director that the facility meets the 

appropriate site conditions and the 

facility has installed and will properly 

operate and maintain submerged 

cylindrical wedgewire screen 

technology (as described in 

§ 125.108(a)(1)) or other technologies as 

approved by the Director under 

§ 125.108(b)). If the facility is subject to 

impingement mortality performance 

standards only, and plans to install 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68487

wedgewire screens with a maximum 

through-screen design intake velocity of 

0.5 feet per second or less, the facility 

should choose the compliance 

alternative in § 125.103(a)(1)(i), and 

does not need to demonstrate that it 

meets the other criteria in 

§ 125.104(a)(1) or prepare a Technology 

Installation and Operation Plan or 

Verification Monitoring Plan. 

Facilities subject to entrainment 

performance standards seeking 

compliance under this alternative 

would submit a Technology Installation 

and Operation Plan and a Verification 

Monitoring Plan that address 

entrainment reduction, and document 

that all of the appropriate site 

conditions in § 125.108(a)(1) exist at 

their facility. To qualify for compliance 

using the cylindrical wedgewire screen 

technology, the facility would have to 

meet the following conditions: (1) The 

cooling water intake structure is located 

in a freshwater river or stream; (2) the 

cooling water intake structure is 

situated such that sufficient ambient 

counter-currents exist to promote 

cleaning of the screen face; (3) the 

maximum through-screen design intake 

velocity is 0.5 feet per second or less;

(4) the slot size is appropriate for the 

size of eggs, larvae, and juveniles of all 

fish and shellfish to be protected at the 

site; and (5) the entire main cooling 

water intake flow is directed through 

the technology. Facilities should 

demonstrate that they meet these 

criteria in the Technology Installation 

and Operation Plan. Note the submerged 

cylindrical wedgewire screen 

technology is only pre-approved if the 

cooling water intake structure is, among 

other things, located in a freshwater 

river or stream (see § 125.108(a)). 

Therefore, this particular pre-approved 

technology would not apply under the 

co-proposed regulatory option that 

defines Phase III existing facilities as 

those with design intakes flows 100 

MGD or more located on tidal rivers, 

estuaries, or oceans, or one of the Great 

Lakes.

In addition, any interested person 

could submit a request that a technology 

be approved for use in accordance with 

the compliance alternative in 

§ 125.103(a)(4). If the Director approves, 

the technology may be used by all 

facilities that have similar site 

conditions under the Director’s 

jurisdiction. To do this, the interested 

person would submit the following as 

required by § 125.108(b): (1) A detailed 

description of the technology; (2) a list 

of design criteria for the technology and 

site characteristics and conditions that 

each facility would need to have in 

order to ensure that the technology can 

consistently meet the appropriate 

impingement mortality and entrainment 

performance standards in § 125.103(b); 

and (3) information and data sufficient 

to demonstrate that all facilities under 

the jurisdiction of the Director can meet 

the applicable impingement mortality 

and entrainment performance standards 

in § 125.103(b) if the applicable design 

criteria and site characteristics and 

conditions are present at the facility. 

EPA is proposing this compliance 

alternative in response to comments 

received under the Phase II proposed 

rule suggesting that EPA provide an 

additional, more streamlined 

compliance option under which a 

facility could implement certain 

specified technologies that are deemed 

highly protective in exchange for 

reducing the scope of the 

Comprehensive Demonstration Study. 

(See, 68 FR 13522, 13539; March 19, 

2003). This approach was also endorsed 

by small entity representatives and the 

Final Report of the Small Business 

Advocacy Review Panel on EPA’s 

Planned Proposed Rule for Cooling 

Water Intake Structures at Section 

316(b) Phase III Facilities (DCN 7–0006). 

EPA is soliciting comments on other 

technologies that are equally protective 

and may be used to meet the 

performance requirements. 

Information To Support Site-Specific 

Determination of Best Technology 

Available for Minimizing Adverse 

Environmental Impact 

If a facility selects compliance 

alternative 5 (§ 125.103(a)(5)), it would 

be required to demonstrate that its costs 

of compliance under the compliance 

alternatives 3 or 4 (§ 125.103(a)(3) or (4)) 

would be significantly greater than the 

costs considered by the Administrator 

for a similar facility in establishing the 

applicable performance standards, or 

that its cost of compliance under 

alternatives 3 and 4 would be 

significantly greater than the benefits of 

complying with the applicable 

performance requirements. Depending 

on the approach taken, a facility would 

be required to complete the SiteSpecific Technology Plan, the 

Comprehensive Cost Evaluation Study, 

and possibly the Benefits Valuation 

Study. These study requirements are 

discussed later in section VII.C.5, 

Alternative Site-Specific Requirements. 

Verification Monitoring Plan 

Section 125.104(b) would require all 

Phase III existing facilities, except those 

deemed to have met the performance 

standard in § 125.103(a)(1), to submit a 

Verification Monitoring Plan to measure 

the efficacy of the implemented design 

and construction technologies and/or 

operational measures. The plan would 

include a monitoring study lasting at 

least two years to verify the full-scale 

performance of the proposed or already 

implemented technologies and of any 

additional operational measures. The 

plan would be required to describe the 

frequency of monitoring and the 

parameters to be monitored and the 

bases for determining these. The 

Director would use the verification 

monitoring results to confirm that the 

facility is meeting the level of 

impingement mortality and/or 

entrainment reduction expected and 

that fish and shellfish are being 

maintained at the level expected (as 

required in § 125.105). Verification 

monitoring would be required to begin 

once the technologies and/or 

operational measures are implemented 

and continue for a sufficient period of 

time (but at least two years) to 

demonstrate that the facility is reducing 

impingement mortality and/or 

entrainment to the level of reduction 

required. 

2. How Would the Director Determine 

the Appropriate Cooling Water Intake 

Structure Requirements? 

The Director’s first step would be to 

determine whether the facility is 

covered by this proposed rule. If the 

answer to all the following questions is 

yes, the facility would be required to 

comply with the requirements of this 

proposed rule. 

(1) Is the facility a point source? 

(2) Is the facility an existing facility 

other than a Phase II existing facility? 

(3) Does the facility use at least 25 

percent of water withdrawn exclusively 

for cooling purposes, measured on an 

average annual basis? and 

(4) Does the facility use, or propose 

to use, a cooling water intake structure 

(including a cooling water intake 

structure operated by an independent 

supplier) that meets the total design 

intake flow/source waterbody threshold 

as specified under each of the three coproposed regulatory options to 

withdraw cooling water from waters of 

the United States? 

If a facility is a point source that uses 

a cooling water intake structure and has 

or is required to have an NPDES permit, 

but does not meet the applicability 

requirements in today’s proposed rule, 

it would continue to be subject to 

permit conditions implementing section 

316(b) of the Clean Water Act set by the 

Director on a case-by-case basis, using 

best professional judgment. 

The Director’s second step would be 

to determine whether the facility 

proposes to comply: By demonstrating 

68488 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

that its existing design and construction 

technologies, operational measures, or 

restoration measures meet the proposed 

performance standards; by 

implementing design and construction 

technologies, operational measures, or 

restoration measures that, in 

combination with existing technologies 

and operational measures, meet the 

proposed performance standards; by 

using an approved technology; or by 

seeking a site-specific determination of 

best technology available to minimize 

adverse environmental impact (see

§ 125.103(a)). 

If a facility selects compliance 

alternative 1 (§ 125.103(a)(1)), and it 

demonstrates that it has reduced its flow 

commensurate with a closed-cycle 

recirculating system and therefore 

already meets the performance 

standards to reduce impingement 

mortality and entrainment, the Director 

would only have to verify that this is 

indeed true; no additional requirements 

are necessary. Under compliance 

alternative 1, a facility may demonstrate 

that it has already reduced its design 

intake velocity to 0.5 feet per second 

and therefore meets the performance 

standards to reduce impingement 

mortality only. Again the Director 

would only need to verify the design 

intake velocity and no further 

requirements would be necessary.

Under compliance alternative 2 

(§ 125.103(a)(2)), in which a Phase III 

existing facility chooses to demonstrate 

that its existing design and construction 

technologies, operational measures, or 

restoration measures meet the proposed 

performance standards, the Director 

would need to verify that the existing 

facility meets the impingement 

mortality and entrainment reduction 

requirements. 

To verify that existing controls meet 

the impingement mortality and 

entrainment reduction requirements in 

the proposed rule, the Director would 

need to: (1) Verify the facility’s baseline 

calculation; (2) confirm the location of 

the facility’s cooling water intake 

structure(s); (3) verify the withdrawal 

percentage of mean annual flow if 

applicable; (4) review impingement 

mortality and/or entrainment rates or 

estimates; and (5) consider any use of 

restoration. These same steps also 

would be part of determining 

requirements under other compliance 

alternatives as discussed below. 

The Director would initially review 

and verify the calculation baseline 

estimate submitted by the facility under 

§ 125.104(b). This estimate would need 

to be consistent with the proposed 

definition of the term ‘‘calculation 

baseline’’ and be representative of 

current biological conditions at the 

facility. The Director would then review 

the information that the facility 

provides to validate the source 

waterbody type in which the cooling 

water intake structure is located 

(freshwater river or stream; lake or 

reservoir; or estuary, tidal river, ocean, 

or Great Lake). The Director would 

review the supporting material the 

applicant provided in the permit 

application to document the physical 

placement of the cooling water intake 

structure. For existing facilities with one 

or more cooling water intake structures 

located in a freshwater river or stream, 

the Director would need to determine 

whether the facility withdraws more or 

less than five percent of the mean 

annual flow, which determines whether 

impingement mortality, or impingement 

mortality and entrainment controls 

would apply. For facilities with cooling 

water intake structures located on lakes 

or reservoirs, other than a Great Lake, 

for which the facility seeks to increase 

the design flow, the Director would 

need to determine whether the 

increased intake flow would disrupt the 

natural thermal stratification or turnover 

pattern of the source waterbody. In 

making this determination, the Director 

would need to consider anthropogenic 

factors that can influence the occurrence 

and location of a thermocline, and 

would need to coordinate with 

appropriate Federal, State, or Tribal fish 

and wildlife agencies to determine if 

any disruption adversely impacts the 

management of the fisheries. Both of 

these determinations would be based on 

the source waterbody flow information 

required under § 125.104(b). 

For Phase III existing facilities that 

have in place existing restoration 

measures that meet the requirements of 

§ 125.103(b), the Director would review 

the evaluation of the current restoration 

measures submitted under § 125.104(b). 

The Director could gather additional 

information and solicit input for the 

review from appropriate fishery 

management agencies as necessary. The 

Director would need to determine 

whether the current measures would 

maintain the fish and shellfish in the 

waterbody at comparable levels to those 

that would be achieved under § 125.103, 

as well as review and approve the 

proposed Restoration Plan required in 

§ 125.104(b). 

Finally, the Director would need to 

review impingement and/or 

entrainment data or estimates to 

determine whether in-place controls 

achieve the performance standards 

proposed for the different categories of 

source waterbodies. This step would 

involve comparing the calculation 

baseline with the impingement and/or 

entrainment data or estimates provided 

as part of the Comprehensive 

Demonstration Study and the 

Impingement Mortality and/or 

Entrainment Characterization Study 

requirements under § 125.104(b). 

If the Director determines that the 

existing technologies, operational 

measures, or supplemental restoration 

measures employed do not achieve 

compliance with the applicable 

performance standards, the Director 

would issue a permit requiring 

additional measures to achieve such 

compliance, based on the information 

submitted in the Comprehensive 

Demonstration Study (§ 125.107(b)(1)). 

If such studies are approved and a 

permit is issued on that basis, but the 

Director later determines, based on the 

results of subsequent monitoring, that 

the technologies, operational measures, 

and supplemental restoration measures 

did not meet the performance standards, 

the Director would require the existing 

facility to implement additional 

technologies and operational measures 

as necessary to meet the rule 

requirements. In general, this would 

occur at the next renewal of the permit. 

The Director would also review the 

facility’s Verification Monitoring Plan 

and/or Restoration Plan (as appropriate) 

for post-operational monitoring to 

demonstrate that the technologies and/

or restoration measures are performing 

as predicted. 

Under compliance alternative 3 

(§ 125.103(a)(3)), the same general steps 

would be followed as described above to 

assess compliance of existing controls 

with applicable performance standards 

except that under this alternative, the 

Phase III existing facility would be 

required to demonstrate that the 

technologies and measures identified 

would meet (rather than currently meet) 

the applicable performance standards. 

This review would also be based on data 

submitted in the Comprehensive 

Demonstration Study required under 

§ 125.104(b). 

For facilities seeking compliance 

under compliance alternative 4 

(§ 125.103(a)(4)), through the use of an 

approved technology, the Director 

would review the Technology 

Installation and Operation Plan and 

Verification Monitoring Plan. 

These same basic steps described 

under compliance alternatives 2 and 3 

would also apply to facilities seeking to 

comply under compliance alternative 5 

(§ 125.103(a)(5)); however, the Director 

would be required to make two 

additional determinations under this 

option, including whether the facility 

meets one of the applicable cost tests 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68489

and what alternative requirements are 

justified in light of the significantly 

greater costs. Phase III existing facilities 

seeking to comply under this option 

would be required to submit a 

Comprehensive Cost Evaluation Study 

under § 125.104(b), which includes data 

that document the cost of implementing 

design and construction technologies, 

operational measures, and/or restoration 

measures to meet the otherwise 

applicable performance standards in 

§ 125.103(b). The Director would need 

to review these data, including detailed 

engineering cost estimates, and compare 

these with the costs the Agency 

considered in establishing these 

requirements for a like Phase III facility. 

Where the Director finds that the 

facility’s cost of implementation is 

significantly greater than those 

considered during rule development, he 

or she would approve site-specific 

requirements and could approve 

alternative technologies or operational 

measures. Such alternative technologies 

or operational measures could be those 

proposed by the facility in the SiteSpecific Technology Plan or Restoration 

Plan, but less protective requirements 

would have to be justified by the 

significantly greater costs. 

Where a Phase III existing facility 

seeks site-specific requirements based 

on facility costs that are significantly 

greater than the environmental benefits 

of compliance, the facility would also be 

required to submit a Benefits Valuation 

Study (along with the Comprehensive 

Cost Evaluation Study). The Director 

would review the benefits valuation, 

including a narrative description of nonquantified benefits, to determine 

whether it fully values the benefits of 

meeting the applicable performance 

standards, as required in § 125.104(b), 

and whether the facility’s cost of 

implementation is significantly greater 

than the environmental benefits of 

complying with the requirements of 

§ 125.103(b). If the Director determines 

that the compliance costs are 

significantly greater than the 

environmental benefits, the Director 

would approve site-specific 

requirements and could approve 

alternative technologies or operational 

measures. Such alternative technologies 

or operational measures could be those 

proposed by the facility in the SiteSpecific Technology Plan and/or 

Restoration Plan, but less protective 

requirements would have to be justified 

by the significantly greater costs. EPA is 

interested in ways to decrease 

application review time and is 

requesting comments on how to make 

this process both efficient and effective.

3. What Would I Be Required To 

Monitor? 

Section 125.105 of today’s proposed 

rule provides that Phase III existing 

facilities would perform monitoring in 

accordance with the Verification 

Monitoring Plan, the Technology 

Installation and Operation Plan, and/or 

the Restoration Plan, all required by 

§ 125.104(b), and any additional 

monitoring specified by the Director to 

demonstrate compliance with the 

applicable requirements of § 125.103(e). 

In developing biological monitoring 

conditions, the Director should consider 

the need for the data, and only collect 

data sufficient to assess the presence, 

abundance, life stages (including eggs, 

larvae, juveniles, and adults), and 

mortality of aquatic organisms (fish and 

shellfish or other organisms required to 

be monitored by the Director) impinged 

or entrained during operation of the 

cooling water intake structure. This type 

of data may be used to develop permit 

conditions to implement the 

requirements of this rule. The Director 

should ensure, where appropriate, that 

any required monitoring will allow for 

the detection of any annual, seasonal, 

and diel variations in the species and 

numbers of individuals that are 

impinged or entrained. 

The Director may modify the 

monitoring program based on changes 

in physical, chemical, or biological 

conditions in the vicinity of the cooling 

water intake structure. The Director may 

also require monitoring of operational 

parameters for facilities that employ a 

Technology Installation and Operation 

Plan or Restoration Plan to comply with 

the requirements of § 125.103. The 

Director would be required to specify 

what monitoring or other data is to be 

included in a status report every two 

years. 

4. How Would Compliance Be 

Determined? 

This proposed rule would be 

implemented by the Director placing 

conditions consistent with the 

requirements of this part in NPDES 

permits. The application information, 

including components of the 

Comprehensive Demonstration Study, 

as appropriate, should demonstrate that 

the facility is already meeting the 

performance standards, or that it will 

install and properly operate and 

maintain design and construction 

technologies, operational measures, 

and/or restoration measures to meet the 

performance standards, or that a sitespecific determination of best 

technology available is necessary. To 

support this demonstration, the facility 

should submit the following 

information to the Director: 

• Data submitted with the NPDES 

permit application to show that the 

facility meets location, design, 

construction, and capacity requirements 

consistent with the compliance 

alternative selected; 

• Data to demonstrate that the facility 

is meeting the performance standards or 

requirements consistent with the 

compliance alternative selected; and 

• Compliance monitoring data and 

records as prescribed by the Director. 

Facilities complying using 

compliance alternatives in § 125.103 

(a)(2)–(5) would be required to submit a 

Technology Installation and Operation 

Plan and Verification Monitoring Plan 

(or Restoration Plan, which includes 

comparable information), regardless of 

how the facility wants to measure 

compliance. The specifics of how 

success in meeting the performance 

standards may be measured (i.e, the 

number of species, whether critical 

species or all species) and the method 

of measurement (e.g., total biomass, 

total counts, etc.) would be determined 

by the Director based on review of the 

proposed methodology submitted by the 

facility in its Verification Monitoring 

Plan and/or Restoration Plan, and any 

other methods the Director considers 

appropriate. 

The facility may request that 

compliance be determined based on 

whether it has complied with the 

construction, operational, maintenance, 

monitoring, and adaptive management 

requirements of its Technology 

Installation and Operation Plan (for 

design and construction technologies 

and/or operational measures) or 

Restoration Plan (for restoration 

measures). In this case, the facility 

would still assess success in meeting 

applicable performance standards or 

restoration requirements but this 

assessment serves to guide the adaptive 

management process rather than as a 

basis for determining compliance. After 

the first permit term following 

promulgation of this rule, facilities are 

only eligible for this compliance 

determination alternative if they have 

been in compliance with the terms of 

their Technology Installation and 

Operation Plan and/or Restoration Plan 

during the preceding permit term. 

Under this compliance determination 

alternative, the Technology Installation 

and Operation Plan or Restoration Plan 

would specify construction, operational, 

maintenance, monitoring, and adaptive 

management requirements that can 

reasonably be expected to achieve 

success in meeting the applicable 

performance standards, restoration 

68490 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

requirements and/or site-specific 

requirements. These construction, 

operational, maintenance, monitoring, 

and adaptive management requirements 

would also be approved by the Director, 

who would be required to specify what 

verification monitoring, monitoring data 

and other information would be 

included in the facility’s biennial status 

report. 

The required elements of the 

Technology Installation and Operation 

Plan include: (1) A schedule for 

installation and maintenance of any 

new technologies; (2) operational 

parameters to be monitored; (3) 

activities to ensure the efficacy of 

technologies and measures; (4) a 

schedule and methodology for assessing 

the efficacy of installed technologies 

and measures in meeting the 

performance standards; (5) an adaptive 

management plan; and (6) for facilities 

using an approved compliance 

technology, documentation that they 

meet the conditions for its use. The 

Restoration Plan requires corresponding 

information as appropriate for 

restoration measures. 

EPA believes that it is important for 

facilities to consider and document each 

of the components of the Technology 

Installation and Operation Plan, 

regardless of which compliance 

determination approach is used. 

However, the level of detail appropriate 

for some of the components may be 

different for the two different 

approaches. For facilities that comply 

by demonstrating success in meeting 

performance standards, particularly in 

cases where they are already meeting 

the standards and no significant changes 

in technologies or operations are 

needed, brief summaries may be 

sufficient for most components, though 

they would still need detailed 

documentation of their schedule and 

methodology for assessing efficacy of 

installed technologies and measures for 

meeting the standards. Conversely, for 

facilities where compliance is 

determined based on whether they have 

complied with the construction, 

operation, maintenance, monitoring, 

and adaptive management approaches 

required in the Technology Installation 

and Operation Plan or Restoration Plan, 

a fairly detailed specification of these 

requirements would be appropriate. The 

Director should ensure that the level of 

detail in the Technology Installation 

and Operation Plan or Restoration Plan 

is sufficient to support whichever 

compliance determination approach is 

selected. 

Section 125.106 requires existing 

facilities to keep records and report 

monitoring data and other information 

specified by the Director in a biennial 

status report, although Directors may 

require more frequent reports. Facilities 

would also keep records of all data used 

to complete the permit application and 

show compliance with the requirements 

of § 125.103, any supplemental 

information developed under § 125.104, 

and any compliance monitoring data 

submitted under § 125.105, for a period 

of at least three (3) years from date of 

permit issuance. The Director may 

require that these records be kept for a 

longer period. 

5. Alternative Site-Specific 

Requirements 

Under § 125.103(a)(5), an existing 

facility may demonstrate to the Director 

that it has selected, installed, and is 

properly operating and maintaining, or 

will install and properly operate and 

maintain, design and construction 

technologies, operational measures, 

and/or restoration measures that the 

Director determines to be the best 

technology available to minimize 

adverse environmental impact for the 

facility based on the cost-cost test 

specified in § 125.103(a)(5)(i) or the 

cost-benefit test specified in 

§ 125.103(a)(5)(ii) of the proposed rule.

Section 125.103(a)(5)(i) provides that 

an existing facility may demonstrate 

that the costs of compliance under the 

compliance alternatives in 

§ 125.103(a)(3) and (4) of the rule would 

be significantly greater than the costs 

considered by the Administrator for a 

like facility in establishing the 

applicable performance standards. In 

such cases, the Director would make a 

site-specific determination of the best 

technology available for minimizing 

adverse environmental impact. The 

Director would establish site-specific 

alternative requirements based on new 

and/or existing design and construction 

technologies, operational measures, 

and/or restoration measures that achieve 

an efficacy that is, in the judgment of 

the Director, as close as practicable to 

the applicable performance standards in 

§ 125.103(b) of the rule without 

resulting in significantly greater costs 

than those considered by the 

Administrator for a like facility. Section 

125.103(a)(5)(ii) provides that an 

existing facility may demonstrate that 

the costs of compliance under 

alternatives in § 125.103(a)(3) and (4) of 

the rule would be significantly greater 

than the benefits of complying with the 

applicable performance standards at 

that facility. In such cases, the Director 

would make a site-specific 

determination of best technology 

available for minimizing adverse 

environmental impact. The Director 

would establish site-specific alternative 

requirements based on new and/or 

existing design and construction 

technologies, operational measures, 

and/or restoration measures that achieve 

an efficacy that, in the judgment of the 

Director, is as close as practicable to the 

applicable performance standards in 

§ 125.103(b) of the rule without 

resulting in costs significantly greater 

than the benefits of meeting the 

performance standards. 

Facility’s Costs Significantly Greater 

Than Costs Considered by EPA 

If the Director determines that data 

specific to the facility indicate that the 

costs of compliance under 

§ 125.103(a)(3) and (4) would be 

significantly greater than the costs 

considered by the Administrator for a 

like facility in establishing the 

applicable performance standards in 

§ 125.103(b), a facility may request a 

site-specific determination of best 

technology available for minimizing 

adverse environmental impacts. A 

facility requesting this determination 

would submit a Comprehensive Cost 

Evaluation Study and a Site Specific 

Technology Plan (§ 125.104(b)). The 

Comprehensive Cost Evaluation Study 

would include: engineering cost 

estimates in sufficient detail to 

document the costs of implementing 

design and construction technologies, 

operational measures, and/or restoration 

measures at the facility that would be 

needed to meet the applicable 

performance standards of § 125.103(b); a 

demonstration that the documented 

costs significantly exceed the costs 

considered by EPA for a like facility in 

establishing the applicable performance 

standards; and engineering cost 

estimates in sufficient detail to 

document the costs of implementing 

alternative design and construction 

technologies, operational measures, 

and/or restoration measures in the 

facility’s Site-Specific Technology Plan 

developed in accordance with 

§ 125.104(b). 

To make the demonstration that 

compliance costs are significantly 

greater than those considered by EPA, 

the facility would first determine its 

actual compliance costs. To do this, the 

facility first should determine the costs 

for any new design and construction 

technologies, operational measures, 

and/or restoration measures that would 

be needed to meet the applicable 

performance standards in § 125.103(b), 

which may include the following cost 

categories: the installed capital cost of 

the technologies or measures; the net 

operation and maintenance (O&M) costs 

for the technologies or measures (that is, 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68491

the O&M costs for the final suite of 

technologies and measures once all new 

technologies and measures have been 

installed less the O&M costs of any 

existing technologies and measures); the 

net revenue losses (lost revenues minus 

saved variable costs) associated with net 

construction downtime (actual 

construction downtime minus that 

portion which would have been needed 

anyway for repair, overhaul or 

maintenance); and any pilot study costs 

associated with on-site verification and/

or optimization of the technologies or 

measures. Costs should be annualized 

using a 7 percent discount rate, with an 

amortization period of 10 years for 

capital costs and 30 years for pilot study 

costs and construction downtime net 

revenue losses. Annualized costs should 

be converted to 2002 dollars ($2002), 

using the engineering news record 

construction cost index (see Engineering 

News-Record. New York: McGraw Hill). 

The annual average index value is 6538 

for year 2002). Costs for permitting and 

post-construction monitoring should not 

be included in this estimate, as these are 

not included in the EPA-estimated costs 

against which they would be compared, 

as described below. Because existing 

facilities already incur monitoring and 

permitting costs and will continue to do 

so regardless of the compliance option 

selected, and these are largely 

independent of the specific performance 

standards adopted and technologies 

selected to meet them, EPA believes it 

is both simpler and more appropriate to 

conduct the cost comparison required in 

this provision using direct compliance 

costs (capital, net O&M, net 

construction downtime, and pilot study) 

only. Adding permitting and monitoring 

costs to both sides of the comparison 

would complicate the analysis without 

substantially changing the results. 

To facilitate the comparison of the 

facility-derived costs with those 

considered by the Agency in 

establishing the proposed requirements, 

EPA has developed an automated cost 

estimating tool. This cost test tool 

estimates the costs using all of the same 

assumptions that EPA considered in 

developing costs for the proposed rule 

and would be made available to both the 

facility and the permitting authority. In 

fact, EPA used this same algorithm to 

estimate the incremental cost impact for 

this proposed rulemaking. This 

approach differs from the approach used 

in the Phase II regulations; however, 

EPA believes that this will provide an 

easier, more exact methodology for 

estimating those costs. In particular, 

EPA believes that this tool is 

appropriate because of the type of data 

on each facility that was available for 

this rulemaking. EPA surveyed only a 

segment of the Phase III universe and, 

therefore had data on a limited number 

of facilities, which required EPA to 

extrapolate costs for the universe of 

facilities potentially covered by this 

proposed rule. EPA therefore used a 

model facility approach in costing 

manufacturing facilities, which is the 

same methodology that is used in the 

development of most of EPA’s 

technology-based effluent guidelines. 

This does not allow for providing a table 

that would give EPA’s cost estimates for 

every Phase III existing facility as was 

done for Phase II. EPA requests 

comments on the use of this Cost Test 

Algorithm and has provided a version 

for review in DCN 7–0004. For more 

details on the cost-test algorithm, see 

the cost-test tool in section VIII and the 

Technical Development Document.

Facilities requesting site-specific 

performance requirements would be 

required to submit a Site-Specific 

Technology Plan. This plan is 

developed based on the results of the 

Comprehensive Cost Evaluation Study 

and would be required to contain the 

following information: 

• A narrative description of the 

design and operation of all existing and 

proposed design and construction 

technologies, operational measures, 

and/or restoration measures selected in 

accordance with § 125.103(a)(5); 

• An engineering estimate of the 

efficacy of the proposed and/or 

implemented design and construction 

technologies or operational measures, 

and/or restoration measures. This 

estimate would include a site-specific 

evaluation of the suitability of the 

technologies or operational measures for 

reducing impingement mortality and/or 

entrainment (as applicable) of all life 

stages of fish and shellfish based on 

representative studies (e.g., studies that 

have been conducted at cooling water 

intake structures located in the same 

waterbody type with similar biological 

characteristics) and, if applicable, sitespecific technology prototype or pilot 

studies. If restoration measures will be 

used, a Restoration Plan that includes 

the elements described in § 125.104(b) 

would be provided; 

• A demonstration that the proposed 

and/or implemented design and 

construction technologies, operational 

measures, and/or restoration measures 

achieve an efficacy that is as close as 

practicable to the applicable 

performance standards of § 125.103(b) 

without resulting in costs significantly 

greater than either the costs considered 

by the Administrator for a facility like 

yours in establishing the applicable 

performance standards, or, if employing 

the cost-benefit test described in B 

below, the benefits of complying with 

the applicable performance standards at 

your facility; and, 

• Design and engineering 

calculations, drawings, and estimates 

prepared by a qualified professional to 

support the elements of the Plan. 

Facility’s Costs Significantly Greater 

Than the Benefits of Complying With 

Performance Standards 

A facility demonstrating that its costs 

are significantly greater than the 

benefits of complying with performance 

standards would produce and submit a 

Comprehensive Cost Evaluation Study, 

a Benefits Valuation Study, and a SiteSpecific Technology Plan. 

The Comprehensive Cost Evaluation 

Study is discussed in the previous 

section. It would require the same 

information for a cost-benefit sitespecific determination as for a cost-cost 

site-specific determination, except that 

the demonstration in § 125.104(b) would 

show that the facility’s actual 

compliance costs significantly exceed 

the benefits of meeting the applicable 

performance standards at the facility. 

The Benefits Valuation Study would 

require that a facility use a 

comprehensive methodology to fully 

value the impacts of impingement 

mortality and entrainment at its site and 

the benefits of complying with the 

applicable performance standards. In 

addition to the valuation estimates, the 

benefit study would include the 

following: 

• A description of the 

methodology(ies) used to value 

commercial, recreational, and ecological 

benefits (including any non-use 

benefits, if applicable);

• Documentation of the basis for any 

assumptions and quantitative estimates. 

If the facility plans to use an 

entrainment survival rate other than 

zero, they would submit a 

determination of entrainment survival at 

the facility based on a study approved 

by the Director; 

• An analysis of the effects of 

significant sources of uncertainty on the 

results of the study; 

• If requested by the Director, a peer 

review of the items submitted in the 

Benefits Valuation Study. The facility 

would be required to choose the peer 

reviewers in consultation with the 

Director who may consult with EPA and 

Federal, State, and Tribal fish and 

wildlife management agencies with 

responsibility for fish and wildlife 

potentially affected by the cooling water 

intake structure. Peer reviewers would 

be required to have appropriate 

68492 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

41 In cases where harm cannot be clearly 

explained to the public, monetization is not feasible 

because stated preference methods are not reliable 

when the environmental improvement being valued 

cannot be characterized in a meaningful way for 

survey respondents.

qualifications depending upon the 

materials to be reviewed. 

• A narrative description of any nonmonetized benefits that would be 

realized at the site if they were to meet 

the applicable performance standards 

and a qualitative assessment of their 

magnitude and significance. 

All benefits, whether expressed 

qualitatively or quantitatively, should 

be addressed in the Benefits Valuation 

Study and considered by the Director in 

determining whether the costs of 

compliance would significantly exceed 

benefits. 

The benefits assessment should begin 

with an impingement mortality and 

entrainment study, which quantifies 

both the baseline mortality as well as 

the expected change from rule 

compliance. The benefits assessment 

should include a qualitative and/or 

quantitative description of the benefits 

that would be produced by compliance 

with the applicable performance 

standards at the facility site and, to the 

extent feasible, monetized (dollar) 

estimates of all significant benefits 

categories using well established and 

generally accepted valuation 

methodologies. The first benefit 

category that would be considered is use 

benefits, which includes such benefits 

as those to commercial and recreational 

fishermen. Well-established revealed 

preference and market proxy methods 

exist for valuing use benefits, and these 

should be used in all cases where the 

impingement mortality and entrainment 

study identifies substantial impacts to 

harvested or other relevant species. 

The second benefit category that 

would be considered is non-use 

benefits. Non-use benefits may arise 

from reduced impacts to ecological 

resources that the public considers 

important, such as threatened and 

endangered species. Non-use benefits 

can generally only be monetized 

through the use of stated preference 

methods. When determining whether to 

monetize non-use benefits, permittees 

and permit writers should consider the 

magnitude and character of the 

ecological impacts implied by the 

results of the impingement mortality 

and entrainment study and any other 

relevant information. 

• In cases where an impingement 

mortality and entrainment 

characterization study identifies 

substantial harm to a threatened or 

endangered species, to the sustainability 

of populations of important species of 

fish, shellfish or wildlife, or to the 

maintenance of community structure 

and function in a facility’s waterbody or 

watershed, non-use benefits should be 

monetized.41

• In cases where an impingement 

mortality and entrainment 

characterization study does not identify 

substantial harm to a threatened or 

endangered species, to the sustainability 

of populations of important species of 

fish, shellfish or wildlife, or to the 

maintenance of community structure 

and function in a facility’s waterbody or 

watershed, monetization is not 

necessary. 

Permittees should consult with their 

permitting authority regarding their 

plans for assessing ecological and nonuse benefits, including whether they 

plan to conduct a stated preference 

study and if so, the basic design of the 

study, including such items as target 

population, sampling strategy, 

approximate sample size, general survey 

design, and other relevant information. 

When conducting quantitative benefits 

assessments, permittees should 

carefully review and follow accepted 

best practices for such studies. A 

discussion of best practices regarding 

valuation can be found in EPA’s 

Guidelines for Preparing Economic 

Analyses (EPA 2000, EPA 240–R–00–

003, September 2000) and OMB Circular 

A–4: Regulatory Analysis (September 

17, 2003, http://www.whitehouse.gov/

omb/inforeg/circular_a4.pdf). In the 

benefits assessment, permittees should 

present the results, as well as clearly 

describe the methods used, the 

assumptions made, and the associated 

uncertainties.

It is recommended that the permittee 

and Director seek peer review of the 

major biological and economic aspects 

of the final benefits assessment. The 

goal of the peer review process is to 

ensure that scientific and technical 

work products receive appropriate 

levels of critical scrutiny from 

independent scientific and technical 

experts as part of the overall decisionmaking process. In designing and 

implementing peer reviews, permittees 

and permit writers could look to EPA’s 

Science Policy Council Handbook—Peer 

Review (EPA 100–B–98–00, January 

1998, http://www.epa.gov/osa/spc/

index.htm) for guidance. 

The Site Specific Technology Plan, as 

described in the previous section, 

would require the same information for 

a cost-benefit site-specific determination 

as for a cost-cost site-specific 

determination, except that the 

demonstration in § 125.104(b) would 

show that the proposed and/or 

implemented technologies and 

measures achieve an efficacy that is as 

close as practicable to the applicable 

performance standards without 

resulting in costs significantly greater 

than the benefits of complying with the 

applicable performance standards at 

your facility. 

D. New Offshore Oil and Gas Extraction 

Facilities 

Under today’s proposed rule, new 

offshore oil and gas extraction facilities 

would be required to submit the 

application requirements consistent 

with § 122.21(r)(2), (3), and (4) and 

§ 125.136 of Subpart N if they are fixed 

facilities and choose to comply with the 

Track I or II requirements in 

§ 125.134(b) or (c). A fixed facility is 

defined as a bottom founded offshore oil 

and gas extraction facility permanently 

attached to the seabed or subsoil of the 

outer continental shelf (e.g., platforms, 

guyed towers, articulated gravity 

platforms) or a buoyant facility securely 

and substantially moored so that it 

cannot be moved without a special 

effort (e.g., tension leg platforms, 

permanently moored semisubmersibles) and which is not 

intended to be moved during the 

production life of the well. This 

definition does not include mobile 

offshore drilling units (MODUs) (e.g., 

drill ships, temporarily moored semisubmersibles, jack-ups, submersibles, 

tender-assisted rigs, and drill barges). 

The Track I and Track II requirements 

are generally consistent with the Phase 

I requirements for new facilities (66 FR 

65256). Under Track I, this includes 

source water baseline biological 

characterization data, velocity 

information, source waterbody flow 

information, and a design and 

construction technology plan. Track II 

requirements include source waterbody 

flow information and Track II 

comprehensive demonstration study 

(including source water biological 

study, evaluation of potential cooling 

water intake structure effects, and 

verification monitoring plan). These 

requirements are detailed later in this 

section. 

As described in § 125.135, fixed 

facilities would also have the 

opportunity to conduct a cost-to-cost 

test and provide data to determine if 

compliance with the Subpart N 

requirements would result in 

compliance costs wholly out of 

proportion to those EPA considered in 

establishing the requirement, or would 

result in significant adverse impacts on 

local water resources other than 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68493

impingement or entrainment, or 

significant adverse impacts on energy 

markets. In this case, alternative 

requirements may be imposed in the 

permit. See the Phase I final preamble 

for a more detailed explanation of this 

cost-cost test which is different than the 

cost-cost test for existing sources (66 FR 

65256).

Fixed facilities with seachests and all 

non-fixed (or ‘‘mobile’’) facilities would 

not be required to comply with 

standards for entrainment. Fixed 

facilities with seachests may choose 

either Track I or Track II to comply with 

impingement mortality performance 

standards. Non-fixed facilities must 

comply with the 0.5 feet per second 

through-screen design intake flow 

velocity performance standard for 

impingement mortality of Track I. In 

addition, the Director may determine 

additional design and construction 

technologies to minimize impingement 

mortality are necessary where there are 

either protected species of concern 

within the hydrologic zone of influence 

of the cooling water intake structure, or 

based on other information from fishery 

management services or agencies. The 

new mobile facility, when applying to 

operate under a general permit, would 

identify where it expects to be 

operating. The Director consults with 

the fishery management agencies, 

considers their data as well as any other 

relevant data, and decides whether to 

propose additional requirements based 

on any concerns the Director identifies 

(see § 125.134(b)(4)). For example, 

Region 10 has established a general 

permit for Cooks Inlet that established a 

0.1 feet per second through-screen 

design intake flow velocity performance 

standard. However, non-fixed facilities 

would not be required to submit the 

source water baseline biological 

characterization data and some aspects 

of the source water physical data 

requirements. Requirements for nonfixed facilities are described later in this 

section. 

EPA notes that some mobile facilities 

(e.g. some jack-ups) may not have 

seachests and therefore could feasibly 

install entrainment controls. EPA 

proposes not to require entrainment 

controls for these mobile facilities due 

to the transient nature of their 

operations and an expectation that they 

are not likely to cause significant 

impacts. EPA took a similar approach in 

its Phase II rule when the Agency did 

not require entrainment controls at 

power plants that operate less than 15 

percent of the year. EPA solicits 

comment and data on its proposal to 

only require impingement controls at 

mobile facilities that do not have 

seachests. 

1. For New Offshore Oil and Gas 

Extraction Fixed Facilities, What 

Information Is Required To Be Collected 

for the NPDES Application? 

Source Water Baseline Biological 

Characterization Data (§ 122.21(r)(4)) 

(Both Track I and II) 

Under today’s proposed rule, new 

offshore oil and gas extraction fixed 

facilities would be required to submit 

source water baseline biological 

characterization data as required under 

Phase I. The data would be used to 

characterize the biological community 

in the vicinity of the cooling water 

intake structure and to characterize the 

operation of the cooling water intake 

structure. The data would include 

existing data (if available) supplemented 

with new field studies as necessary. 

Detailed data requirements are at 

§ 122.21(r)(4). Under today’s proposed 

rule, a group of fixed facilities may 

choose to conduct a regional study to 

collect this information as approved by 

the Director. EPA recognizes that many 

offshore oil and gas extraction facilities 

are regulated under NPDES general 

permits and that regional studies are 

typically conducted as part of the 

general permit requirements. EPA 

anticipates the regional studies would 

be conducted once each permit cycle. 

Under today’s proposed rule, the 

regional study would also include 

annual monitoring requirements. 

Velocity Information (Track I) 

Today’s proposed rule would require 

that new offshore oil and gas extraction 

fixed facilities submit velocity 

information consistent with 

§ 125.136(b)(2). The information would 

be used to demonstrate to the Director 

that the facility is complying with the 

requirement to meet a maximum 

through-screen design intake velocity of 

no more than 0.5 feet per second at the 

cooling water intake structure. The 

following information would be 

required to be submitted: (1) A narrative 

description of the design, structure, 

equipment, and operation used to meet 

the velocity requirement; and (2) design 

calculations showing that the velocity 

requirement would be met at minimum 

ambient source water surface elevations 

(based on best professional judgment 

using available hydrological data) and 

maximum head loss across the screens 

or other device or, if the facility uses 

devices other than a surface intake 

screen, at the point of entry to the 

device. 

Source Waterbody Flow Information 

(Track I and II) 

Today’s proposed rule would also 

require that new offshore oil and gas 

extraction fixed facilities submit source 

waterbody flow information in 

accordance with § 125.136(b)(2) or 

(c)(1). The information would be used to 

demonstrate to the Director that the 

facility’s cooling water intake structure 

meets the proportional flow 

requirements at § 125.134(b)(3) or (c)(2). 

These requirements would include 

specific provisions for fixed facilities 

located on estuaries or tidal rivers to 

provide greater protection for these 

sensitive waters. Specifically, the 

proposed rule would require that the 

total design intake flow over one tidal 

cycle of ebb and flow must be no greater 

than one (1) percent of the volume of 

the water column within the area 

centered about the opening of the intake 

with a diameter defined by the distance 

of one tidal excursion at the mean low 

water level. Calculations and guidance 

on determining the tidal excursion is 

found in the preamble to the final Phase 

I rule at section VII.B.1.d. 

Design and Construction Technology 

Plan (Track I) 

Today’s proposed rule would also 

require that new offshore oil and gas 

extraction fixed facilities submit a 

design and construction technology 

plan consistent with Subpart N 

requirements at § 125.136(b)(3). The 

design and construction technology 

plan would demonstrate that the facility 

has selected and will implement the 

design and construction technologies 

necessary to minimize impingement 

mortality and/or entrainment in 

accordance with § 125.134(b)(4) and/or 

(5). The design and construction 

technology plan would require 

delineation of the hydrologic zone of 

influence for the cooling water intake 

structure; a description of the 

technologies implemented (or to be 

implemented) at the facility; the basis 

for the selection of that technology; the 

expected performance of the technology, 

and design calculations, drawings and 

estimates to support the technology 

description and performance. The 

Agency recognizes that the selection of 

a specific technology or a group of 

technologies would depend on the 

individual facility and waterbody 

conditions.

Track II Comprehensive Demonstration 

Study (Track II) 

If a fixed facility chooses to comply 

under the Track II approach, the facility 

would perform and submit the results of 

68494 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

a Comprehensive Demonstration Study 

(Study). This information would be 

used to characterize the source water 

baseline in the vicinity of the cooling 

water intake structure(s); characterize 

operation of the cooling water intake(s); 

and to confirm that the technology(ies) 

proposed and/or implemented at the 

cooling water intake structure reduce 

the impacts to fish and shellfish to 

levels comparable to those the facility 

would achieve were it to implement the 

applicable requirements in 

§ 125.134(b)(2) and, for facilities 

without seachests, § 125.134(b)(5). To 

meet the ‘‘comparable level’’

requirement, the facility would 

demonstrate that it has reduced both 

impingement mortality and entrainment 

of all life stages of fish and shellfish to 

90 percent or greater of the reduction 

that would be achieved through the 

applicable requirements in 

§ 125.134(b)(2) and, for facilities 

without seachests, § 125.134(b)(5). 

Similar to the Proposal for 

Information Collection required in 

Phase II, the facility would develop and 

submit a plan to the Director containing 

a proposal for how information will be 

collected to support the study. The plan 

would include: 

• A description of the proposed and/

or implemented technology(ies) to be 

evaluated in the Study; 

• A list and description of any 

historical studies characterizing the 

physical and biological conditions in 

the vicinity of the proposed or actual 

intakes and their relevancy to the 

proposed Study. If the facility proposes 

to rely on existing source waterbody 

data, the data must be no more than 5 

years old, and the facility would 

demonstrate that the existing data are 

sufficient to develop a scientifically 

valid estimate of potential impingement 

mortality and entrainment impacts, and 

provide documentation showing that 

the data were collected using 

appropriate quality assurance/quality 

control procedures; 

• Any public participation or 

consultation with Federal or State 

agencies undertaken in developing the 

plan; and 

• A sampling plan for data that will 

be collected using actual field studies in 

the source waterbody. The sampling 

plan would document all methods and 

quality assurance procedures for 

sampling, and data analysis. The 

sampling and data analysis methods 

proposed would be appropriate for a 

quantitative survey and based on 

consideration of methods used in other 

studies performed in the source 

waterbody. The sampling plan would 

include a description of the study area 

(including the area of influence of the 

cooling water intake structure and at 

least 100 meters beyond); taxonomic 

identification of the sampled or 

evaluated biological assemblages 

(including all life stages of fish and 

shellfish); and sampling and data 

analysis methods. 

The facility would submit 

documentation of the results of the 

Study to the Director. Documentation of 

the results of the Study would include: 

Source Water Biological Study, an 

evaluation of potential cooling water 

intake structure effects, and a 

verification monitoring plan as 

described below.

Source Water Biological Study. The 

Source Water Biological Study would 

include: 

(1) A taxonomic identification and 

characterization of aquatic biological 

resources including: A summary of 

historical and contemporary aquatic 

biological resources; determination and 

description of the target populations of 

concern (those species of fish and 

shellfish and all life stages that are most 

susceptible to impingement and 

entrainment); and a description of the 

abundance and temporal/spatial 

characterization of the target 

populations based on the collection of 

multiple years of data to capture the 

seasonal and daily activities (e.g., 

spawning, feeding and water column 

migration) of all life stages of fish and 

shellfish found in the vicinity of the 

cooling water intake structure; 

(2) An identification of all threatened 

or endangered species that might be 

susceptible to impingement and 

entrainment by the proposed cooling 

water intake structure(s); and 

(3) A description of additional 

chemical, water quality, and other 

anthropogenic stresses on the source 

waterbody. 

Evaluation of potential cooling water 

intake structure effects. This evaluation 

would include: 

(1) Calculations of the reduction in 

impingement mortality and, if 

applicable, entrainment of all life stages 

of fish and shellfish that would need to 

be achieved by the technologies selected 

to implement to meet requirements 

under Track II. To do this, the facility 

would determine the reduction in 

impingement mortality and entrainment 

that would be achieved by 

implementing the requirements of 

§ 125.134(b)(2) and, for facilities 

without seachests, § 125.134(b)(5). 

(2) An engineering estimate of efficacy 

for the proposed and/or implemented 

technologies used to minimize 

impingement mortality and, if 

applicable, entrainment of all life stages 

of fish and shellfish and maximize 

survival of impinged life stages of fish 

and shellfish. The facility would 

demonstrate that the technologies 

reduce impingement mortality and, if 

applicable, entrainment of all life stages 

of fish and shellfish to a comparable 

level to that which would be achieved 

if the facility were to implement the 

requirements in § 125.134(b)(2) and, for 

facilities without seachests, 

§ 125.134(b)(5). The efficacy projection 

would include a site-specific evaluation 

of technology(ies) suitability for 

reducing impingement mortality and 

entrainment based on the results of the 

Source Water Biological Study. Efficacy 

estimates may be determined based on 

case studies that have been conducted 

in the vicinity of the cooling water 

intake structure and/or site-specific 

technology prototype studies. 

Verification monitoring plan. The 

fixed facility would include in the 

Study a plan to conduct, at a minimum, 

two years of monitoring to verify the 

full-scale performance of the proposed 

or implemented technologies, and/or 

operational measures. The verification 

study would begin at the start of 

operations of the cooling water intake 

structure and continue for a sufficient 

period of time to demonstrate that the 

facility is reducing the level of 

impingement mortality and entrainment 

to the level documented under the 

evaluation of potential cooling water 

intake structure effects. The plan would 

describe the frequency of monitoring 

and the parameters to be monitored. The 

Director would use the verification 

monitoring to confirm that the facility is 

meeting the level of impingement 

mortality and entrainment reduction 

required in § 125.134(c), and that the 

operation of the technology has been 

optimized. 

2. As an Owner or Operator of a New 

Offshore Oil and Gas Extraction Fixed 

Facility, What Monitoring Is Required? 

Monitoring requirements for new 

offshore oil and gas extraction fixed 

facilities include impingement mortality 

and entrainment if the facility does not 

have a seachest. If the fixed facility has 

a seachest, monitoring requirements 

include impingement mortality only. 

Under today’s proposal, monitoring 

would characterize the impingement 

and, if applicable, entrainment rates of 

commercial, recreational, and forage 

base fish and shellfish species identified 

in either the Source Water Baseline 

Biological Characterization data 

required by 40 CFR 122.21(r)(3) or the 

Comprehensive Demonstration Study 

required by § 125.136(c)(2), depending 

on whether the facility has a seachest. 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68495

The monitoring methods used would be 

consistent with those used for the 

Source Water Baseline Biological 

Characterization data required in 40 

CFR 122.21(r)(4) or the Comprehensive 

Demonstration Study required by 

§ 125.136(c)(2). 

The fixed facility would be required 

to follow the monitoring frequencies 

identified below for at least two (2) 

years after the initial permit issuance. 

After that time, the Director may 

approve a request for less frequent 

sampling in the remaining years of the 

permit term and when the permit is 

reissued, if supporting data show that 

less frequent monitoring would still 

allow for the detection of any seasonal 

and daily variations in the species and 

numbers of individuals that are 

impinged or entrained. 

Impingement sampling. The facility 

would collect samples to monitor 

impingement rates (simple 

enumeration) for each species over a 24-

hour period and no less than once per 

month when the cooling water intake 

structure is in operation. 

Entrainment sampling. If the fixed 

facility does not use a seachest, it would 

collect samples to monitor entrainment 

rates (simple enumeration) for each 

species over a 24-hour period and no 

less than biweekly during the primary 

period of reproduction, larval 

recruitment, and peak abundance 

identified during the Source Water 

Baseline Biological Characterization 

required by 40 CFR 122.21(r)(4) or the 

Comprehensive Demonstration Study 

required in § 125.136(c)(2). Samples 

would be collected only when the 

cooling water intake structure is in 

operation. 

Velocity monitoring. If the facility 

uses a surface intake screen system, it 

would be required to monitor head loss 

across the screens and correlate the 

measured value with the design intake 

velocity. The head loss across the intake 

screen would be measured at the 

minimum ambient source water surface 

elevation (using best professional 

judgment based on available 

hydrological data). The maximum head 

loss across the screen for each cooling 

water intake structure would be used to 

determine compliance with the velocity 

requirement in § 125.134(b)(2). If the 

facility uses devices other than surface 

intake screens, it would monitor 

velocity at the point of entry through the 

device. Head loss or velocity would be 

monitored during initial facility startup, 

and thereafter, at the frequency 

specified in the NPDES permit, but no 

less than once per quarter. 

Visual or remote inspections. The 

facility would conduct visual 

inspections or employ remote 

monitoring devices during the period 

the cooling water intake structure is in 

operation. Visual inspections would be 

conducted at least weekly to ensure that 

any design and construction 

technologies required in § 125.134(b)(4), 

(b)(5), (c), and/or (d) are maintained and 

operated to ensure that they will 

continue to function as designed. 

Alternatively, the facility would be 

required to inspect via remote 

monitoring devices to ensure that the 

impingement and entrainment 

technologies are functioning as 

designed. 

3. What Recordkeeping and Reporting Is 

Required for New Offshore Oil and Gas 

Extraction Fixed Facilities? 

Owners and operators of new offshore 

oil and gas extraction fixed facilities 

would be required to keep records of all 

the data used to complete the permit 

application and show compliance with 

the requirements, any supplemental 

information developed under § 125.136, 

and any compliance monitoring data 

submitted under § 125.137, for a period 

of at least three years from the date of 

permit issuance. The Director may 

require that these records be kept for a 

longer period.

Additionally, today’s proposal would 

require that new offshore oil and gas 

extraction fixed facilities submit the 

following in a yearly status report: 

• Biological monitoring records for 

each cooling water intake structure as 

required by § 125.137(a); 

• Velocity and head loss monitoring 

records for each cooling water intake 

structure as required by § 125.137(b); 

and 

• Records of visual or remote 

inspections as required in § 125.137(c). 

4. For New Non-Fixed (Mobile) Offshore 

Oil and Gas Extraction Facilities, What 

Information Is Required To Be Collected 

for the NPDES Application? 

Velocity Information (Track I) 

Today’s proposed rule would require 

that new nonfixed (mobile) offshore oil 

and gas extraction facilities submit 

velocity information consistent with 

§ 125.136(b)(1). The information would 

be used to demonstrate to the Director 

that the facility is complying with the 

requirement to meet a maximum 

through-screen design intake velocity of 

no more than 0.5 feet per second at the 

cooling water intake structure. The 

following information would be 

required to be submitted: (1) A narrative 

description of the design, structure, 

equipment, and operation used to meet 

the velocity requirement; and (2) design 

calculations showing that the velocity 

requirement would be met at minimum 

ambient source water surface elevations 

(based on best professional judgment 

using available hydrological data) and 

maximum head loss across the screens 

or other device. 

Design and Construction Technology 

Plan (Track I) 

Today’s proposed rule would require 

that new nonfixed (mobile) offshore oil 

and gas extraction facilities submit a 

design and construction technology 

plan only when required by the Director 

consistent with § 125.134(b)(4). The 

design and construction technology 

plan would demonstrate that the facility 

has selected and will implement the 

design and construction technologies 

necessary to minimize impingement 

mortality in accordance with 

§ 125.134(b)(4). The design and 

construction technology plan would 

require delineation of the hydrologic 

zone of influence for the cooling water 

intake structure; a description of the 

technologies implemented (or to be 

implemented) at the facility; the basis 

for the selection of that technology; the 

expected performance of the technology, 

and design calculations, drawings and 

estimates to support the technology 

description and performance. The 

Agency recognizes that the selection of 

a specific technology or a group of 

technologies would depend on the 

individual facility and waterbody 

conditions. 

5. As an Owner or Operator of a New 

Non-Fixed (Mobile) Offshore Oil and 

Gas Extraction Facility, What 

Monitoring Is Required?

Under today’s proposal, the Director 

may require monitoring to characterize 

the impingement of commercial, 

recreational, and forage base fish and 

shellfish species as specified by the 

Director in accordance with 

§ 125.134(b)(4) or § 125.134(d). 

Velocity monitoring. If the mobile 

facility uses a surface intake screen 

system, it would be required to monitor 

head loss across the screens and 

correlate the measured value with the 

design intake velocity. The head loss 

across the intake screen would be 

measured at the minimum ambient 

source water surface elevation (using 

best professional judgment based on 

available hydrological data). The 

maximum head loss across the screen 

for each cooling water intake structure 

would be used to determine compliance 

with the velocity requirement in 

§ 125.134(b)(2). If the facility uses 

devices other than surface intake 

screens, it would monitor velocity at the 

68496 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

point of entry through the device. Head 

loss or velocity would be monitored 

during initial facility startup, and 

thereafter, at the frequency specified in 

the NPDES permit, but no less than once 

per quarter. 

Visual or remote inspections. The 

facility would conduct visual 

inspections or employ remote 

monitoring devices during the period 

the cooling water intake structure is in 

operation. Visual inspections would be 

conducted at least weekly to ensure that 

any design and construction 

technologies required in § 125.134(b)(4), 

(b)(5), (c), and/or (d) are maintained and 

operated to ensure that they will 

continue to function as designed. 

Alternatively, the facility would be 

required to inspect via remote 

monitoring devices to ensure that the 

impingement technologies are 

functioning as designed. 

6. What Recordkeeping and Reporting Is 

Required for New Non-Fixed (Mobile) 

Offshore Oil and Gas Extraction 

Facilities? 

Owners and operators of new mobile 

offshore oil and gas extraction facilities 

would be required to keep records of all 

the data used to complete the permit 

application and show compliance with 

the requirements, any supplemental 

information developed under § 125.136, 

and any compliance monitoring data 

submitted under § 125.137, for a period 

of at least three years from the date of 

permit issuance. The Director may 

require that these records be kept for a 

longer period. 

Additionally, today’s proposal would 

require that new mobile offshore oil and 

gas extraction facilities submit the 

following in a yearly status report: 

• Velocity and head loss monitoring 

records for each cooling water intake 

structure as required by § 125.137(b); 

and 

• Records of visual or remote 

inspections as required in § 125.137(c). 

E. What Are the Respective Federal, 

State, and Tribal Roles? 

Section 316(b) requirements are 

implemented through NPDES permits. 

Under 40 CFR 123.62(e), any existing 

approved State or Tribal section 402 

permitting program would be revised to 

be consistent with new program 

requirements within one year from the 

date of promulgation, unless the 

NPDES-authorized State or Tribe 

amends or enacts a statute to make the 

required revisions. If a State or Tribe 

amends or enacts a statute to conform 

with any promulgated Phase III rule, the 

revision would be required to be made 

within two years of promulgation. States 

and Tribes seeking new EPA 

authorization to implement the NPDES 

program would be required to comply 

with the requirements when 

authorization is requested. 

This proposed regulation would not 

alter State authority under section 510 

of the Clean Water Act. EPA recognizes 

that some States have invested 

considerable effort in developing 

section 316(b) regulations and 

implementing programs. EPA is 

proposing regulations that would allow 

States to continue to use these programs 

by including in this national rule a 

provision that allows States to use their 

existing program if the State establishes 

that such programs would achieve 

comparable environmental performance. 

Specifically, the proposed rule would 

allow any State to demonstrate to the 

Administrator that it has adopted 

alternative regulatory requirements that 

would result in environmental 

performance within each relevant 

watershed that is comparable to the 

reductions in impingement mortality 

and entrainment that would be achieved 

under § 125.103. 

In addition to updating their programs 

to be consistent with today’s proposed 

rule, States and Tribes authorized to 

implement the NPDES program would 

be required to implement the cooling 

water intake structure requirements 

following promulgation of the proposed 

regulations. The requirements would 

have to be implemented upon the 

issuance or reissuance of permits 

containing the requirements of Subpart 

K or N. Duties of an authorized State or 

Tribe under this regulation may include: 

• Review and verification of permit 

application materials, including a 

permit applicant’s determination of 

source waterbody classification and the 

flow or volume of certain waterbodies at 

the point of the intake;

• Determination of the standards in 

§ 125.103(b) or § 125.134 that apply to 

the facility, or authorize alternative 

requirements in § 125.135; 

• Verification of a permit applicant’s 

determination of whether it meets or 

exceeds the applicable performance 

standards or requirements; 

• Verification that a permit 

applicant’s Design and Construction 

Technology Plan demonstrates that the 

proposed alternative technologies 

would reduce the impacts to fish and 

shellfish to levels required; 

• Verification that a permit applicant 

meets the cost test and that permit 

conditions developed on a site-specific 

basis are justified based on documented 

costs, and, if applicable, benefits; 

• Verification that a permit 

applicant’s proposed restoration 

measures would meet regulatory 

standards (existing facilities only); 

• Development of draft and final 

NPDES permit conditions for the 

applicant implementing applicable 

section 316(b) requirements pursuant to 

this rule; and 

• Ensuring compliance with permit 

conditions based on section 316(b) 

requirements. 

EPA also will implement these 

requirements where States or Tribes are 

authorized to implement the NPDES 

program but do not have sufficient 

authority to implement these 

requirements. 

In the discussion of Federal, State and 

Tribal roles in the preamble to the Phase 

II final regulations (69 FR 41643, 3rd 

col.), EPA stated that ‘‘EPA will 

implement these requirements where 

States or Tribes are not authorized to 

implement the NPDES program. EPA 

also will implement these requirements 

where States or Tribes are authorized to 

implement the NPDES program but do 

not have sufficient authority to 

implement these requirements.’’ EPA 

notes that the second sentence in this 

quote incorrectly stated EPA’s authority. 

In fact, EPA does not have authority to 

issue NPDES permits where States or 

Tribes are authorized to administer the 

NPDES program except after EPA vetoes 

a permit. (See § 123.61(c) and 

§ 123.44(h).) Today’s preamble correctly 

states that States and Tribes authorized 

to implement the NPDES program 

would need to have or obtain sufficient 

authority to implement final Phase III 

regulations. EPA intends to issue 

guidance to clarify that, pursuant to 

§ 123.25(a)(36), States and Tribes 

authorized to implement the NPDES 

program must have or obtain sufficient 

authority to implement the Phase II 

regulations. 

F. Are Permits for Phase III Facilities 

Subject to Requirements Under Other 

Federal Statutes? 

EPA’s NPDES permitting regulations 

at 40 CFR 122.49 contain a list of 

Federal laws that might apply to 

Federally issued NPDES permits. These 

include the Wild and Scenic Rivers Act, 

16 U.S.C. 1273 et seq.; the National 

Historic Preservation Act of 1966, 16 

U.S.C. 470 et seq.; the Endangered 

Species Act, 16 U.S.C. 1531 et seq.; the 

Coastal Zone Management Act, 16 

U.S.C. 1451 et seq.; and the National 

Environmental Policy Act, 42 U.S.C. 

4321 et seq. See 40 CFR 122.49 for a 

brief description of each of these laws. 

In addition, the provisions of the 

Magnuson-Stevens Fishery 

Conservation and Management Act, 16 

U.S.C. 1801 et seq., relating to essential 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68497

fish habitat might be relevant. Nothing 

in this proposed rulemaking would 

authorize activities that are not in 

compliance with these or other 

applicable Federal laws.

VIII. Economic Impact Analysis 

The discussion in this section 

summarizes EPA’s analysis of total 

social cost and economic impacts for 

three co-proposed options for existing 

facilities: the ‘‘50 MGD for All 

Waterbodies’’ option, the ‘‘200 MGD for 

All Waterbodies’’ option, and the ‘‘100 

MGD for Certain Waterbodies’’ option. 

These options are described more fully 

in section VI. EPA also conducted 

analyses for other potential regulatory 

definitions, including applying 

requirements to all facilities with design 

intake flow of at least 2 MGD. This 

definition would have included all 683 

potentially regulated Phase III facilities. 

This and other potential regulatory 

specifications are not being proposed 

because of economic practicability 

concerns, but analyses for them can be 

found in ‘‘Economic Analysis for the 

Proposed Section 316(b) Rule for Phase 

III Facilities’’ (hereafter referred to as the 

‘‘EA’’; DCN 7–0002). This section also 

presents EPA’s estimates of total social 

cost and economic impacts for new 

offshore oil and gas extraction facilities. 

EPA’s assessment of costs and economic 

impacts, including results for all 

analyzed regulatory definitions, can be 

found in the EA. 

A. Existing Phase III Facilities: 

Manufacturers and Electric Power 

Producers 

1. Overview of Affected Industry Sectors 

For the economic analyses, EPA 

distinguished between the types of 

facilities as follows: 

• Manufacturing and Other Industries 

(‘‘Manufacturers’’)—facilities in the 

paper, aluminum, steel, chemicals, 

petroleum and other industries. In 

addition to engaging in production 

activities, some of these facilities also 

generate electricity for their own use 

and occasionally for sale. 

• Electric power producers (‘‘Electric 

Generators’’)—facilities owned by 

investor-owned utilities, municipalities, 

States, Federal authorities, cooperatives, 

and non-utilities. 

Within the Manufacturers group, EPA 

focused its analysis on five 

manufacturing industries—Paper, 

Chemicals, Petroleum, Aluminum, and 

Steel (the ‘‘Primary Manufacturing 

Industries’’)—as the industries using the 

largest amounts of cooling water outside 

of the electric power generating 

industry. EPA’s economic analysis for 

these industries is based on a 

statistically-valid survey sample of 

facilities in these five industries. This 

analysis also considers the effect of the 

regulation on facilities in other 

industries (‘‘Other Industries’’) that use 

cooling water to a lesser extent than the 

five Primary Manufacturing Industries 

and that are also covered by the 

proposal. The analysis for Other 

Industries is restricted to a limited 

sample of facilities for which EPA 

received detailed surveys but which are 

not part of the statistically valid sample. 

As a result, EPA’s analysis of facilities 

in the Other Industries group is limited 

to the known facilities in this group. 

EPA has not specifically estimated the 

total number of facilities in the Other 

Industries group that may be subject to 

the regulation because EPA does not 

believe that this number can be reliably 

extrapolated from the number of known 

facilities in this group. However, 

because the six surveyed industries 

(including electric power) account for 

99% of total cooling water withdrawals, 

EPA believes that few additional 

facilities in the Other Industries group 

are potentially subject to today’s 

proposed regulation. EPA seeks 

comment and data on the number of 

facilities in the Other Industries group 

that may be subject to today’s proposal.

EPA’s analysis also reflects a limited 

number facilities in the Virgin Islands 

and Puerto Rico for which EPA received 

detailed survey responses. These 

facilities have also been included in 

EPA’s economic analysis. EPA is 

clarifying today’s proposal would apply 

to any facility meeting the applicability 

criteria in § 125.101. EPA seeks 

comment and data on the total number 

of facilities that may be subject to 

today’s proposal. 

EPA’s review of the engineering 

characteristics of cooling water intake 

and use in the Other Industries group 

indicates that cooling water intake and 

use in these industries do not differ 

materially from cooling water intake 

and use in the Primary Manufacturing 

Industries and the electric power 

industry. In addition, EPA specifically 

analyzed the economic impacts of the 

proposed options on known facilities in 

the Other Industries group. EPA 

believes that its findings of no economic 

impact to the known facilities in Other 

Industries and the practicability of the 

proposed options are generally 

applicable to the full breadth of 

industries within the regulation’s scope. 

EPA is seeking comment and data on 

the economic impact and practicability 

of the proposed options on facilities in 

the Other Industries group. 

EPA estimates that as many as 566 

facilities in the Manufacturers segment 

(including 537 facilities in the Primary 

Manufacturing Industries and 29 known 

facilities in Other Industries), and 117 

Electric Generators are potentially 

subject to this rulemaking, based on a 

design intake flow applicability 

threshold of greater than 2 MGD. EPA 

excluded from the analysis for each 

option those facilities that are below the 

option’s design intake flow applicability 

threshold and would therefore not incur 

compliance costs. In addition, EPA’s 

analyses identified existing facilities 

that are in severe financial distress 

independent of regulation. These 

facilities, referred to as ‘‘baseline 

closures,’’ were determined as likely to 

terminate business operations 

independent of the proposed options 

and were also excluded from the 

analyses presented in this section. 

Exhibit VIII–1 presents, by waterbody 

type and industry, EPA’s estimates of (1) 

the number of existing facilities 

potentially subject to this rulemaking, 

(2) the number of baseline closures, and 

(3) the number of existing facilities 

subject to national requirements under 

five different design intake flow 

applicability thresholds.

EXHIBIT VIII–1.—PHASE III EXISTING FACILITY COUNTS, BY WATERBODY TYPE AND INDUSTRY

Industry 

Potentially

subject to

regulation 

Baseline

closure 

Facilities subject to national requirements with DIF applicability threshold of greater than or equal to (in MGD), excluding baseline closures 

2 20 50 100 200 

All Waterbodies

Primary Man. Industries ........................... 537 73 464 290 127 58 23 

Other Industries ....................................... 29 4 25 12 9 5 2 

68498 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

EXHIBIT VIII–1.—PHASE III EXISTING FACILITY COUNTS, BY WATERBODY TYPE AND INDUSTRY—Continued

Industry 

Potentially

subject to

regulation 

Baseline

closure 

Facilities subject to national requirements with DIF applicability threshold of greater than or equal to (in MGD), excluding baseline closures 

2 20 50 100 200 

Electric Generators .................................. 117 3 114 51 0 0 0 

Total .................................................. 683 80 603 353 136 63 25 

Total DIF (MGD) ............................... 40,441 4,440 36,001 33,683 26,714 21,587 16,144 

Coastal and Great Lakes

Primary Man. Industries ........................... 110 17 94 67 35 17 10 

Other Industries ....................................... 9 3 6 5 4 2 1 

Electric Generators .................................. 11 0 11 4 0 0 0 

Total .................................................. 130 20 111 76 39 19 11 

Total DIF (MGD) ............................... 11,010 2,423 8,587 8,179 7,190 5,747 4,418 

Inland

Primary Man. Industries ........................... 427 56 371 223 92 41 13 

Other Industries ....................................... 20 1 19 7 5 3 1 

Electric Generators .................................. 106 3 103 47 0 0 0 

Total .................................................. 553 60 493 277 97 44 14 

Total DIF (MGD) ............................... 29,431 2,017 27,414 25,504 19,524 15,841 11,726 

2. Method for Estimating Costs to 

Manufacturers and Electric Generators 

EPA estimated capital costs of 

technologies, annual operation and 

maintenance costs, installation 

downtime costs, and permitting costs. 

The cost estimates reflect the 

incremental costs attributed only to 

today’s proposal. For example, facilities 

with closed-cycle recirculating systems 

already meet the proposed performance 

standards, and therefore would not 

incur costs for new technologies, 

additional annual operational costs, or 

downtime costs (though such facilities 

would still incur some components of 

permitting costs). 

For estimating the incremental 

compliance costs attributable to the 

proposed options, EPA developed both 

facility-specific and model facility costs. 

Facility-specific compliance costs 

require detailed process information 

about many, if not all, facilities in the 

industry. These data typically include 

production, capacity, water use, 

wastewater generation, monitoring 

results, geographic location, financial 

conditions, technologies and practices 

already in place, and other facilityspecific data. EPA used a detailed 

technical survey of Electric Generators 

and Manufacturers to collect these data 

(see section III for more information on 

EPA’s detailed survey). These data and 

detailed process information were used 

to determine whether new controls 

would be necessary to meet the 

standards of the proposed rule, and to 

estimate the cost of installing any new 

or additional controls. While the 

Agency is confident that the suite of 

available technologies can achieve 

compliance with the proposed 

performance requirements (60–90 

percent reduction in entrainment and 

80–95 percent reduction in 

impingement mortality relative to the 

calculation baseline), EPA lacks 

sufficient data and resources to 

determine the precise cost and 

performance of each technology on a 

site-specific basis. Therefore, EPA first 

calculated the facility-specific costs for 

348 facilities for which detailed 

information was available, and applied 

the model facility approach to the 

remaining facilities to calculate the 

industry-level costs for the 

approximately 700 existing 

Manufacturers and Electric Generators. 

In costing each model facility, EPA, to 

a degree, departed from its traditional 

least-cost approach. The least-cost 

approach relies on the principle that the 

complying facility will choose the most 

cost-effective compliance alternative to 

meet the regulatory requirements. In 

most cases, this means the facility will 

install the least-cost technology that 

meets the minimum standard. Instead of 

selecting the least-cost compliance 

alternative (see section VI for a 

description of the compliance 

alternatives), a best-performing 

technology was assigned to a model 

facility utilizing a spreadsheet program 

called the ‘‘cost-test tool.’’ The cost-test 

tool determines one of two possible 

performance expectations: (1) 

Impingement requirements only or (2) 

both impingement and entrainment 

requirements. The cost-test tool then 

determines a compliance response for 

the facility/intake by accounting for 

existing technologies (such as 

wedgewire screens) and conditions 

(such as a shoreline intake location or 

the through-screen velocity). Next, the 

cost-test tool applies EPA’s decision tree 

for assigning one of 12 technology 

modules as the best-performing 

technology to a site (see Figure 2–1 of 

the Phase III TDD for a schematic of this 

decision tree). This should not be 

construed to mean today’s proposed 

options would require facilities to 

install the technologies selected by the 

cost-test tool. Under today’s proposal, 

facilities could choose any technology, 

combination of technologies, or 

operational measures that would meet 

the requirements of the selected 

compliance alternative along with any 

other additional permit requirements. 

Finally, cost estimates are derived 

through a combination of calculations 

and functions that apply facility-specific 

data to the selected technology module. 

The cost outputs include capital costs, 

incremental operating and maintenance 

(O&M) costs, and installation downtime 

(in weeks). 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68499

42Benefits are tallied and discounted in the same 

way, although the total time profile for recognition 

of benefits is longer than the profile for recognition 

of costs.

Based on data from EPA’s detailed 

technical survey, EPA believes that 

cooling water intake structures at 

Electric Generators are, in general, no 

different from those intake structures 

employed by Manufacturers. Therefore, 

the Phase II costs attributed to control 

technologies were used to calculate 

costs for potentially regulated existing 

Phase III Manufacturers and Electric 

Generators. EPA generally utilized the 

original methodology published in the 

Phase II NODA (68 FR 13522; March 19, 

2003), accounting for comments 

received from the public. EPA also used 

the costing equations it developed for 

the final Phase II rule, along with the 

site-specific data obtained from the 

detailed surveys. EPA requests 

comment, including supporting data, on 

the use of technologies and costing 

equations from the Phase II rule in the 

Phase III analysis.

Permit costs, including costs for 

permitting, monitoring, permit 

reissuance, and recordkeeping, are not 

included in the cost-test tool. Costs for 

these activities were developed 

separately as part of the Information 

Collection Request (ICR) for Cooling 

Water Intake Structures Phase III 

Proposed Rule (‘‘ICR’’; DCN 7–0001). 

The per facility permit costs were added 

to the incremental compliance costs, 

along with installation downtime costs 

(where appropriate), in developing the 

total model facility cost. The per facility 

permit costs may be found in Chapter 

B1 of the EA. 

In addition to the capital and annual 

operating costs of the selected 

technology module, 16 facilities 

(sample-weighted, with more than 50 

MGD intake, and excluding baseline 

closures) incur downtime costs. 

Downtime costs generally reflect 

decreased revenues due to lost 

production or costs of supplemental 

power purchases during the retrofit of 

existing cooling water intake structures. 

EPA determined that an additional four 

facilities with multiple intakes could 

shut off any one intake and still meet 

their average intake flow without 

exceeding the total design intake flow of 

the remaining intakes. Furthermore, 

these facilities all have shoreline 

intakes, negating the need to maintain 

costly offshore equipment necessary to 

retrofit one intake at a time. EPA 

assumes these four facilities could 

retrofit one intake at a time, thereby 

avoiding downtime costs. In all other 

cases, the length of downtime (in weeks) 

and the general approach to estimating 

the cost of downtime are the same as 

used for the Phase II analysis. See 

chapter 5 of the TDD for more details. 

EPA solicits comment and supporting 

data on this approach to estimating 

downtime costs. 

Total social costs are presented in 

section VIII.C of this preamble. 

Under today’s proposal, facilities have 

five compliance alternatives for meeting 

the performance standards. Not all of 

these compliance alternatives are 

addressed by the cost-test tool. The costtest tool, and therefore total national 

costs, do not specifically adjust for sitespecific requirements developed in 

accordance with compliance alternative 

5 (see also section VI of this preamble). 

While costs for facilities requesting 

alternative requirements based on the 

cost-cost test should be comparable to 

EPA’s estimated costs, costs for facilities 

requesting alternative requirements 

based on the cost-benefit test may be 

less. In addition, each model facility 

was costed for a single best-performing 

technology module, which does not 

necessarily reflect the most costeffective compliance alternative. Thus, 

although EPA’s costs for each model 

facility to install a specified compliance 

technology are believed to be accurate, 

the total national costs of today’s 

proposal may be overstated. 

EPA solicits comment on all aspects 

of this costing approach. 

3. Social Cost for Manufacturers and 

Electric Generators 

EPA calculated the social cost of the 

three co-proposed options for existing 

Manufacturers and Electric Generators 

using two discount rate values: 3 

percent and 7 percent. All dollar values 

presented in this preamble are in 2003 

dollars (average or mid-year). For the 

analysis of social costs, EPA discounted 

all costs to the beginning of 2007, the 

date at which this proposal is assumed 

to become effective. EPA assumed that 

all facilities subject to the regulation 

would achieve compliance between 

2010 and 2014, and estimated the time 

profile of compliance and related costs 

over 30 years from the year of 

compliance for each complying 

facility.42 Costs incurred by 

governments for administering the 

regulation were analyzed over the same 

time frame. The last year for which costs 

were tallied is 2043. At a 3 percent rate, 

EPA estimated total annualized social 

costs of $47.3 million for the ‘‘50 MGD 

for All Waterbodies’’ option, $22.8 

million for the ‘‘200 MGD for All 

Waterbodies’’ option, and $17.6 million 

for the ‘‘100 MGD for Certain Water 

bodies’’ option. At a 7 percent rate, 

these values are $50.1 million for the 50 

MGD option, $24.1 million for the 200 

MGD option, and $18.3 million for the 

100 MGD option. The largest component 

of social cost is the pre-tax cost of 

regulatory compliance incurred by 

complying facilities; these costs include 

pilot study costs, one-time technology 

costs of complying with the rule, onetime costs of installation downtime, 

annual operating and maintenance 

costs, and permitting costs (initial 

permit costs, annual monitoring costs, 

and permit reissuance costs). Social cost 

also includes implementation costs 

incurred by Federal and State 

governments. Exhibit VIII–2 presents 

the social cost of the proposed options, 

by type of cost and type of facility, using 

3 percent and 7 percent discount rates.

EXHIBIT VIII–2.—ANNUALIZED SOCIAL COST

[In millions, 2003 $] 

50 MGD all 

waterbodies 

200 MGD all 

waterbodies 

100 MGD 

certain 

waterbodies 

3% Discount Rate

Direct Compliance Cost: 

Primary Manufacturing Industries ............................................................................................. $42.7 $21.7 $16.7 

Other Industries ......................................................................................................................... 4.1 1.0 0.7 

Electric Generators ................................................................................................................... 0.0 0.0 0.0 

68500 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

EXHIBIT VIII–2.—ANNUALIZED SOCIAL COST—Continued

[In millions, 2003 $] 

50 MGD all 

waterbodies 

200 MGD all 

waterbodies 

100 MGD 

certain 

waterbodies 

Total Direct Compliance Cost ............................................................................................ 46.8 22.6 17.5 

State and Federal Administrative Cost ............................................................................................ 0.6 0.1 0.2 

Total Social Cost ....................................................................................................................... 47.3 22.8 17.6 

7% Discount Rate

Direct Compliance Cost: 

Primary Manufacturing Industries ............................................................................................. 45.1 23.1 17.4 

Other Industries ......................................................................................................................... 4.4 0.9 0.7 

Electric Generators ................................................................................................................... 0.0 0.0 0.0 

Total Direct Compliance Cost ............................................................................................ 49.5 24.0 18.1 

State and Federal Administrative Cost ............................................................................................ 0.6 0.1 0.2 

Total Social Cost ....................................................................................................................... 50.1 24.1 18.3 

As shown in Exhibit VIII–2, 

compliance cost in the Manufacturers 

segment accounts for the substantial 

majority of total social cost and direct 

compliance cost under all three options. 

No Electric Generators would be subject 

to the national requirements under any 

of the three co-proposed options. On a 

per facility basis and at a 3 percent 

discount rate, annualized pre-tax costs 

in the Manufacturers segment amount to 

$349,000 under the ‘‘50 MGD for All 

Waterbodies’’ option, $920,000 under 

the ‘‘200 MGD for All Waterbodies’’

option, and $929,000 under the ‘‘100 

MGD for Certain Waterbodies’’ option. 

The corresponding values using a 7 

percent discount rate are $369,000 

under the ‘‘50 MGD for All 

Waterbodies’’ option, $974,000 under 

the ‘‘200 MGD for All Waterbodies’’

option, and $962,000 under the ‘‘100 

MGD for Certain Waterbodies’’ option. 

Because the 200 MGD option and the 

100 MGD option apply national 

categorical requirements to a smaller 

number of higher flow facilities than the 

50 MGD option, they result in a lower 

total national cost but a higher cost per 

regulated facility. Individual facilities 

that are subject to the requirements of 

the 200 MGD option or the 100 MGD 

option incur the same compliance costs 

as under the 50 MGD option (in which 

they are also included); however, the 

average costs per regulated facility are 

higher under the 200 MGD and 100 

MGD options because only the higher 

flow, and therefore higher cost, facilities 

incur costs under these options. 

EPA’s estimate of Federal and State 

government costs for administering this 

proposal is comparatively minor in 

relation to the estimated direct cost of 

regulatory compliance. EPA estimates 

government annual administrative costs 

of approximately $0.6 million (50 MGD 

option), $0.1 million (200 MGD option), 

and $0.2 million (100 MGD option) 

under both discount rates. 

4. Economic Impacts for Manufacturers 

and Electric Generators 

The economic impact analyses assess 

how facilities, and the firms that own 

them, are expected to be affected 

financially by the analyzed options. The 

facility impact analysis starts with 

compliance cost estimates (see section 

VIII.A.2) and then calculates how these 

compliance costs would affect financial 

performance and other economic 

conditions. 

a. Manufacturers (Primary 

Manufacturing Industries and Other 

Industries) 

This section presents EPA’s estimated 

economic impacts on Manufacturers for 

the three co-proposed options. Measures 

of economic impact include facility 

closures and associated losses in 

employment, financial stress short of 

closure (‘‘moderate impacts’’), and firmlevel impacts. EPA eliminated from the 

analysis those facilities showing 

materially inadequate financial 

performance in the baseline, that is, in 

the absence of the rule. EPA judges 

these facilities, which are referred to as 

baseline closures, to be at substantial 

risk of financial failure regardless of any 

additional financial burden that might 

result from the proposed Phase III 

regulation. 

For the remaining facilities, EPA 

identified a facility as a regulatory 

closure if it would have operated under 

baseline conditions but would fall 

below an acceptable financial 

performance level under the new 

regulatory requirements. EPA’s analysis 

of regulatory closures is based on the 

estimated change in facility after-tax 

cash flow (cash flow) as a result of the 

regulation and specifically examines 

whether the change in cash flow would 

be sufficient to cause the facility’s going 

concern business value to become 

negative. EPA calculated business value 

using a discounted cash flow framework 

in which cash flow is discounted at an 

estimated cost of capital to calculate the 

going concern value of the facility. The 

specific definition of cash flow used in 

these analyses is after-tax free cash flow 

available to all capital—equity and debt. 

Correspondingly, the cost of capital 

reflects the combined cost, after-tax, of 

equity and debt capital. For its analysis 

of economic/financial impacts on the 

Manufacturers industry segment, EPA 

used 7 percent as a real, after-tax cost of 

capital.

In these analyses, EPA first calculated 

the baseline going concern value of the 

facility using its baseline cash flow—

i.e., facility cash flow before 

compliance-related outlays. For this 

calculation, EPA used the three-year 

average of cash flow as reported in each 

facility’s survey response and adjusted 

to constant 2003 dollars. In addition to 

adjusting facility cash flow values for 

inflation to 2003, EPA adjusted facility 

baseline cash flow to reflect the 

estimated real change (i.e., independent 

of inflation) in business performance in 

the manufacturing industries from the 

time of the facility survey, 1996–1998, 

to the present. EPA also estimated an 

ongoing outlay for replacement of the 

facility’s capital equipment and 

included this as an adjustment to 

baseline cash flow. EPA included an 

allowance of ongoing capital outlays in 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68501

43The estimated number of Manufacturers 

considered in the impact analysis (554) differs from 

the number reported in the broader analyses (566) 

because of the exclusion of some sample surveys 

with missing data and the rescaling of the 

remaining surveys to extrapolate national impacts. 

EPA determined that the survey responses of 14 

sample facilities lacked certain financial data 

needed for the facility impact analysis while 

containing sufficient data to support estimates of 

facility counts and compliance costs. EPA therefore 

retained these sample facilities (37 sample weighted 

facilities) in the broader analyses but excluded 

them from the impact analysis. When these sample 

facilities were excluded from the impact analysis, 

the sample weights for the remaining facilities 

within the affected sample frames were adjusted 

upwards to account for their removal. The 

difference in the reported facility totals in the 

impact and social cost analyses reflects the removal 

of these 14 facilities and the use of adjusted sample 

weights. The removal of specific sample facilities 

from the analysis universe and simultaneous 

adjustment of sample weights to account for their 

removal yields the same estimate of the total 

combined population of Manufacturers and Electric 

Generators for the analysis. However, as a result of 

the sample stratification methodology, the estimates 

of the total facility populations for Manufacturers 

only differ slightly between the two sample facility 

cases. Both values are valid statistical estimates of 

the same, but unknown, value of the Manufacturers 

facility population.

the calculation of cash flow because 

such outlays for replacement and 

refurbishment of capital equipment 

occur in the ordinary course of business 

and represent a cash outlay for the 

business. EPA estimated these outlays 

based on an econometric analysis of 

actual capital outlays over an 11-year 

period by businesses in the five 

Manufacturers industry segments. This 

analysis accounted for national 

economic conditions, business 

conditions in the specific industry 

segments, and financial performance of 

the individual businesses (see EA, 

Chapter B3 for details of this analysis 

and the details of the cash flow 

calculation). Using this adjusted 

baseline cash flow, if EPA found the 

facility’s estimated going concern value 

to be negative, then the facility was 

judged a baseline closure—i.e., likely to 

fail financially, independent of 

incurrence of compliance costs—and 

removed the facility from further 

consideration in the impact analysis. 

As the second step in the facility 

impact analysis, EPA adjusted the 

baseline cash flow to reflect the 

expected financial effects of compliance 

technology installation and operation. 

For this analysis, EPA assumed that 

none of the facility’s compliance costs 

could be passed on to its customers as 

price and revenue increase—i.e., all 

compliance costs must be absorbed 

within the facility’s cash flow. EPA then 

recalculated the facility’s business value 

using the adjusted post-compliance cash 

flow. If this analysis found that the 

facility’s business value would become 

negative as a result of meeting 

compliance requirements, then EPA 

judged the facility to be a regulatory 

closure. 

EPA also identified facilities that 

would likely incur moderate financial 

impacts, but that are not expected to 

close, as a result of the proposed rule. 

EPA established thresholds for two 

measures of financial performance and 

condition—interest coverage ratio (ICR) 

and pre-tax return on assets (PTRA)—

and compared the facilities’

performance before and after 

compliance under each regulatory 

option with these thresholds. EPA 

calculated ICR as pre-tax operating cash 

flow—earnings before interest, taxes, 

and depreciation—divided by interest 

expense. This measure provides insight 

into a business’ ability to service its debt 

on the basis of current, ongoing 

financial performance and to borrow for 

capital investments. EPA calculated 

PTRA as the ratio of pre-tax operating 

income—earnings before interest and 

taxes—to assets. This ratio measures the 

operating performance and profitability 

of a business’ assets independent of 

financial structure and tax 

circumstances. For this analysis, EPA 

developed industry-specific thresholds 

from data compiled by Risk 

Management Association, Inc. (RMA). 

The threshold values represent the 25th 

percentile values of PTRA and ICR for 

statements received by RMA for the 

eight years from 1994 to 2001 within 

relevant industries. Thresholds by 

sector ranged from 1.8% to 2.9% for 

PTRA and from 2.0 to 2.4 for ICR (see 

EA Chapter B3 for additional 

information). EPA attributed 

incremental moderate impacts to the 

rule if both financial ratios exceeded 

threshold values in the baseline (i.e., 

there were no moderate impacts in the 

baseline), but at least one financial ratio 

fell below the threshold value in the 

post-compliance case. 

i. Baseline Closure Analysis 

Exhibit VIII–3 presents projected 

baseline closures for the estimated 

facilities in the Primary Manufacturing 

Industries and additional known 

facilities in Other Industries.43 From the 

analysis as outlined above, EPA 

determined that 76 facilities (or 14 

percent) of the estimated 532 regulated 

facilities in the five Primary 

Manufacturing Industries are baseline 

closures. The highest percentages of 

baseline closures occur in the Steel 

industry sector (43 percent) and 

Aluminum industry sector (33 percent). 

An additional four facilities (or 18 

percent) of the 22 known facilities in 

Other Industries are projected to be 

baseline closures. These facilities were 

excluded from the post-compliance 

analysis of regulatory impacts.

EXHIBIT VIII–3.—SUMMARY OF BASELINE CLOSURES FOR MANUFACTURERS

Sector Total number 

of facilities 

Number of 

baseline

closures 

Percentage of 

baseline

closures 

Operating in 

baseline 

Paper ............................................................................................................... 230 32 13.9 198 

Chemicals ........................................................................................................ 178 4 2.2 173 

Petroleum ......................................................................................................... 36 5 13.9 30 

Steel ................................................................................................................. 68 29 42.6 40 

Aluminum ......................................................................................................... 21 7 33.3 14 

Total Facilities in Primary Manufacturing Industries ................................ 532 76 14.3 456 

Additional known facilities in Other Industries ................................................. 22 4 18.2 18

Total Manufacturers .................................................................................. 554 80 14.4 474 

68502 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

ii. Number of Facilities Passing the 

Baseline Closure Analysis and Subject 

to National Categorical Requirements 

As described above, the number of 

Manufacturers subject to national 

categorical requirements differs 

according to (1) the options’ design 

intake flow (DIF) applicability 

thresholds, and (2) the type of 

waterbodies to which they would apply. 

Of the three co-proposed options 

presented here, the ‘‘100 MGD for 

Certain Waterbodies’’ option would 

apply to the smallest number of the 

facilities that passed the baseline 

closure analysis (‘‘baseline-pass 

facilities’’)—20 facilities, or 18 facilities 

in the Primary Manufacturing Industries 

and two known facilities in Other 

Industries (see Exhibit VIII–4). The ‘‘200 

MGD for All Waterbodies’’ option 

would apply to 24 baseline-pass 

facilities, or 22 facilities in the Primary 

Manufacturing Industries and two 

known facilities in Other Industries. 

The ‘‘50 MGD for All Waterbodies’’

would apply to 133 baseline-pass 

facilities, or 127 facilities in the Primary 

Manufacturing Industries and 6 known 

facilities in Other Industries.

EXHIBIT VIII–4.—NUMBER OF BASELINE-PASS MANUFACTURING FACILITIES SUBJECT TO NATIONAL CATEGORICAL

REQUIREMENTS BY OPTION AND SECTOR

Sector 

Total operating in 

baseline 

Number of facilities subject to national categorical requirements 

50 MGD all waterbodies 200 MGD all waterbodies 100 MGD certain 

waterbodies 

Number Percent Number Percent Number Percent 

Paper ........................................................ 198 37 18.7 3 1.5 0 0.0 

Chemicals ................................................ 173 52 30.1 5 2.9 7 4.0 

Petroleum ................................................. 30 13 43.3 3 10.0 5 16.7 

Steel ......................................................... 40 22 55.0 9 22.5 6 15.0 

Aluminum ................................................. 14 5 35.7 1 7.1 0 0.0 

Total Facilities in Primary Manufacturing Industries ............................. 456 127 27.9 22 4.8 18 3.9 

Additional known facilities in Other Industries ....................................................... 18 6 33.3 2 11.1 2 11.1 

Total Manufacturers .......................... 474 133 28.1 24 5.1 20 4.2 

Note: May not sum to totals due to independent rounding. 

iii. Post-Compliance Impact Analysis; 

Summary of Impacts 

Of the 474 Manufacturers potentially 

subject to regulation after baseline 

closures, EPA estimated that no 

facilities would close or incur 

employment losses as a result of the 

three co-proposed options considered 

here. EPA also found that none of the 

474 baseline-pass facilities would incur 

a moderate economic impact as a result 

of the three co-proposed options. 

Exhibit VIII–5 summarizes the 

estimated impacts of the proposed rule 

on Manufacturers by option, including 

facility impacts and total annualized 

compliance costs on an after-tax basis. 

The reported costs include no 

compliance costs for facilities assessed 

as baseline closures. The total 

annualized, after-tax compliance cost 

reported in Exhibit VIII–5 represents the 

cost actually incurred by complying 

firms, taking into account the reductions 

in tax liability resulting from 

compliance outlays and assuming no 

recovery of costs from customers 

through increased prices. The after-tax 

analysis uses a combined Federal/State 

tax rate, and accounts for facilities’

baseline tax circumstances. Specifically, 

tax offsets to compliance costs are 

limited not to exceed facility-level tax 

payments as reported in facility 

questionnaire responses. The total 

annualized, after-tax compliance cost 

reported here is the sum of annualized, 

after-tax costs by facility at the year of 

compliance, using a 7 percent after-tax 

cost of capital. This cost calculation 

differs in concept from the calculation 

of compliance costs as included in the 

calculation of the total social costs of 

the regulation. For the social cost 

calculation, which is presented in 

section VIII.A.2, the year-by-year stream 

of total pre-tax compliance costs for all 

facilities is discounted to the assumed 

effectiveness date of the 316(b) Phase III 

final rule—beginning of year 2007—and 

then annualized. Two social discount 

rate values, 3 percent and 7 percent, are 

used in the social cost analysis.

EXHIBIT VIII–5.—FACILITY IMPACTS FOR MANUFACTURERS

50 MGD all 

waterbodies 

200 MGD all 

waterbodies 

100 MGD

certain 

waterbodies 

Primary Manufacturing Industries

Number of Facilities Operating in Baseline ........................................................................... 456 456 456 

Number of Facilities Subject to National Requirements ....................................................... 127 22 18 

Percentage of Facilities Subject to National Requirements .................................................. 27.9 4.8 3.9 

Number of Closures (Severe Impacts) .................................................................................. 0 0 0 

Percentage of Facilities Closing ............................................................................................ 0.0 0.0 0.0 

Number of Facilities with Moderate Impacts ......................................................................... 0 0 0 

Percentage of Facilities with Moderate Impacts ................................................................... 0.0 0.0 0.0 

Annualized Compliance Costs (after tax, million $2003) ...................................................... $32.8 $13.7 $15.8 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68503

EXHIBIT VIII–5.—FACILITY IMPACTS FOR MANUFACTURERS—Continued

50 MGD all 

waterbodies 

200 MGD all 

waterbodies 

100 MGD

certain 

waterbodies 

Additional Known Facilities in Other Industries

Number of Facilities Operating in Baseline ........................................................................... 18 18 18 

Number of Facilities Subject to National Requirements ....................................................... 6 2 2 

Percentage of Facilities Subject to National Requirements .................................................. 33.3 11.1 11.1 

Number of Closures (Severe Impacts) .................................................................................. 0 0 0 

Percentage of Facilities Closing ............................................................................................ 0.0 0.0 0.0 

Number of Facilities with Moderate Impacts ......................................................................... 0 0 0 

Percentage of Facilities with Moderate Impacts ................................................................... 0.0 0.0 0.0 

Annualized Compliance Costs (after tax, million $2003) ...................................................... $5.2 $0.7 $0.6 

iv. Firm-Level Impact 

In addition to analyzing the impact of 

the regulation at the facility level, EPA 

also examined the impact of the 

proposed rule on firms that own 

manufacturing facilities with cooling 

water intake structures. A firm that 

owns multiple facilities could be 

adversely affected due to the cumulative 

burden of regulatory requirements over 

these facilities. EPA also used the firmlevel analysis to compare impacts on 

small versus large firms, as required by 

the Regulatory Flexibility Act as 

amended by the Small Business 

Regulatory Enforcement Fairness Act. 

Section XI.C of this preamble discusses 

RFA/SBREFA issues. For the assessment 

of firm-level effects, EPA calculated 

annualized after-tax compliance costs as 

a percentage of firm revenue and reports 

here the estimated number and 

percentage of affected firms incurring 

compliance costs in three cost-torevenue ranges: less than 1 percent; at 

least 1 percent but less than 3 percent; 

and 3 percent or higher. 

EPA’s sample-based analysis of 

facilities in the Primary Manufacturing 

Industries supports specific estimates of 

the number of facilities expected to be 

affected by the regulation and the total 

compliance costs expected to be 

incurred in these facilities. However, 

the sample-based analysis does not 

support specific estimates of the number 

of firms that own facilities in the 

Primary Manufacturing Industries. In 

addition, and as a corollary, the samplebased analysis does not support specific 

estimates of the number of regulated 

facilities that may be owned by a single 

firm, or of the total of compliance costs 

across regulated facilities that may be 

owned by a single firm. For the firmlevel analysis, EPA therefore considered 

two approximate bounding cases based 

on the sample weights developed from 

the facility survey. These cases provide 

a range of estimates for the number of 

firms incurring compliance costs and 

the costs incurred by any firm owning 

a regulated facility. The cases are as 

follows: 

1. Upper bound estimate of number of 

firms owning facilities that face 

requirements under the regulation; 

lower bound estimate of total 

compliance costs that a firm may incur.

For this case, EPA assumed (1) that a 

firm owns only the regulated sample 

facility(ies) that it is known to own from 

the sample analysis and (2) that this 

pattern of ownership, observed for 

sampled facilities and their owning 

firms, extends over the facility 

population represented by the sample 

facilities. This case minimizes the 

possibility of multi-facility ownership 

by a single firm and thus maximizes the 

count of affected firms, but also 

minimizes the potential cost burden to 

any single firm. 

2. Lower bound estimate of number of 

firms owning facilities that face 

requirements under the regulation; 

upper bound estimate of total 

compliance costs that a firm may incur.

For this case, EPA inverted the prior 

assumption and assumed that any firm 

owning a regulated sample facility(ies), 

owns the known sample facility(ies) and 

all of the sample weights associated 

with the sample facility(ies). This case 

yields an approximate lower bound 

estimate of the count of affected firms, 

and an approximate upper bound 

estimate of the potential cost burden to 

any single firm (see EA Chapter B3 for 

information on the analysis of firm-level 

impacts). 

EPA included the additional known 

facilities in Other Industries in these 

analyses but since these facilities have 

no sample weight (i.e., they are not 

modeled to represent facilities other 

than themselves), the upper and lower 

bound estimates were not applicable to 

them.

Exhibit VIII–6 summarizes the results 

of the firm-level analysis for these two 

analytic cases.

EXHIBIT VIII–6.—FIRM-LEVEL AFTER-TAX ANNUAL COMPLIANCE COSTS AS A PERCENTAGE OF REVENUE

Number of firms in the analysis Pot. reg. 

No costs Number and percentage with after tax annual compliance costs/annual 

revenue of 

Number Percent Less than 1% 1–3% At Least 3% 

Number Percent Number Percent Number Percent 

Primary Manufacturing Industries

Case 1: Upper bound estimate of number of firms owning facilities that face requirements under the regulation; lower bound estimate of total 

compliance costs that a firm may incur

50 MGD All Waterbodies ............. 313 208 66 105 34 0 0 0 0 

200 MGD All Waterbodies ........... 313 292 93 21 7 0 0 0 0 

100 MGD Certain Waterbodies .... 313 293 94 21 7 0 0 0 0 

68504 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

44See section II.B for a definition of a new 

offshore oil and gas extraction facility for the 

purposes of this proposal.

45Because individual permits are not issued, 

costs for pre-permitting and re-permitting studies 

are assumed to be shared among groups of new 

facilities expected to be covered by the general 

permits (see DCN 7–4036 for detailed information 

on how permitting costs are assumed to be shared 

under the general permits).

EXHIBIT VIII–6.—FIRM-LEVEL AFTER-TAX ANNUAL COMPLIANCE COSTS AS A PERCENTAGE OF REVENUE—Continued

Number of firms in the analysis Pot. reg. 

No costs Number and percentage with after tax annual compliance costs/annual 

revenue of 

Number Percent Less than 1% 1–3% At Least 3% 

Number Percent Number Percent Number Percent 

Case 2: Lower bound estimate of number of firms owning facilities that face requirements under the regulation; upper bound estimate of total 

compliance costs that a firm may incur

50 MGD All Waterbodies ............. 100 54 54 46 46 0 0 0 0 

200 MGD All Waterbodies ........... 100 86 86 14 14 0 0 0 0 

100 MGD Certain Waterbodies .... 100 88 88 12 12 0 0 0 0 

Other Industries

50 MGD All Waterbodies ............. 14 10 71 4 29 0 0 0 0 

200 MGD All Waterbodies ........... 14 13 93 1 7 0 0 0 0 

100 MGD Certain Waterbodies .... 14 13 93 1 7 0 0 0 0 

As presented in Exhibit VIII–6, EPA 

estimated that the number of firms 

owning regulated facilities in the 

Primary Manufacturing Industries range 

from 100 (Case 2 estimate) to 313 (Case 

1 estimate), depending on the assumed 

ownership cases outlined above. An 

additional 14 firms are known to own 

facilities in Other Industries. No firms 

are estimated to incur total compliance 

costs equal to or exceeding 1 percent of 

revenue under any of the regulatory 

options. 

b. Electric Generators 

All Electric Generators with a design 

intake flow of 50 MGD or greater were 

already covered by the final Phase II 

regulation. As a result, no Electric 

Generators are subject to the national 

categorical requirements of the three coproposed options. 

B. New Offshore Oil and Gas Extraction 

Facilities 

1. Overview of Affected Industry Sectors 

The proposed rule establishes 

requirements for new facilities that 

would apply to new offshore oil and gas 

extraction facilities that employ a 

cooling water intake structure (CWIS) 

and are designed to withdraw greater 

than 2 million gallons per day (MGD) 

from waters of the United States.44

Offshore oil and gas extraction facilities 

(‘‘Oil and Gas Facilities’’) are facilities 

primarily engaged in oil and gas 

production and drilling activities. This 

analysis includes oil and gas production 

platforms/structures and mobile 

offshore drilling units (MODUs). EPA 

estimates that 21 new oil and gas 

extraction platforms and 103 new 

MODUs would be subject to the national 

requirements of the proposed option, 

assuming a 20-year period of 

construction from 2007 (the assumed 

effective date of the rule) to 2026. Each 

newly-constructed facility is assumed to 

operate for 30 years, extending the 

entire analysis period over 49 years 

(2007 to 2055). Different methods of 

discounting over time are used for the 

social cost and impact analyses. Social 

costs are discounted to 2007, the 

assumed effective date of the rule, and 

then annualized over 30 years using 3% 

and 7% discount rates. For the impact 

analysis, compliance costs are 

discounted for each individual facility 

to the year of compliance (the year the 

vessel is launched or the platform/

structure comes on line, which ranges 

from 2007 to 2026) and then summed to 

produce an aggregate present value of 

compliance costs. This aggregate present 

value is then annualized over 30 years 

using 3% and 7% discount rates.

2. Social Cost for New Offshore Oil and 

Gas Extraction Facilities 

The total annualized social cost of the 

proposed option for new Oil and Gas 

facilities is estimated at $3.7 million 

using a 3 percent discount rate, and $3.0 

million using a 7 percent discount rate. 

The largest component of social cost is 

the pre-tax cost of regulatory 

compliance incurred by complying 

facilities; these costs include one-time 

technology costs of complying with the 

rule, annual operating and maintenance 

costs, and permitting costs (initial 

permit costs, annual monitoring costs, 

and permit reissuance costs). Social cost 

also includes implementation costs 

incurred by the Federal government. 

EPA expects that for the most part, the 

proposed regulation would be 

implemented under general permits, 

two in the Gulf of Mexico, and one in 

Cook Inlet Alaska.45 States are thus not 

likely to be involved in administering 

the permits for new regulated offshore 

oil and gas facilities because the 

facilities in the Gulf of Mexico operate 

in non-State waters (beyond the 3-mile 

limit) and Alaska does not have NPDES 

authority. EPA requests comment on its 

projections about the operating 

locations of new facilities.

EPA estimates that direct compliance 

costs would be $3.2 million and $2.7 

million, using a 3 percent and 7 percent 

discount rate, respectively. The 

estimated Federal government cost for 

administering the rule for new facilities 

is comparatively minor in relation to the 

estimated direct cost of regulatory 

compliance. Federal administrative 

costs are estimated to be $0.4 million 

and $0.3 million per year under the 3 

percent and 7 percent discount rates, 

respectively. 

3. Economic Impacts for New Offshore 

Oil and Gas Extraction Facilities 

The following two subsections 

present economic impacts for MODUs 

and production platforms/structures, 

respectively. Certain aspects of the 

methodology differ between the two 

segments. Oil and gas production 

operations involve production of a finite 

resource, which limits the potential life 

of a production platform. Thus, the 

analysis for production platforms/

structures must account for the 

production and resulting exhaustion of 

the finite oil and gas resource. Key 

considerations in the platforms analysis 

are: (1) When does production 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68505

46Consistent with generally accepted methods of 

business value analysis, EPA would have preferred 

to use the present value of after-tax cash flow 

instead of net income as the basis for this analysis. 

However, because it could not reliably estimate all 

of the elements of cash flow, the Agency instead 

used the present value of net income for its closure 

test. In particular, EPA was unable to estimate the 

ongoing capital outlays (apart from those resulting 

from regulatory compliance) that MODUs would 

need to make as part of their ordinary business 

operations. In performing the analysis in this way, 

the Agency essentially used the facility’s reported 

depreciation and amortization—which, being noncash items, are normally excluded from cash flow 

accounting—as an approximation of ongoing capital 

outlays. How use of reported depreciation and 

amortization, instead of a reliable estimate of 

capital outlays, affects the findings from this 

analysis cannot be precisely known. For some 

businesses—in particular those with relatively 

strong financial performance—depreciation and 

amortization may be less than ongoing capital 

outlays; for these businesses, the analysis will tend 

to overstate business value and understate the 

potential effect of compliance outlays on financial 

performance and business value. On the other hand, 

for some businesses—in particular those with 

relatively weak financial performance—

depreciation and amortization may exceed ongoing 

capital outlays; for these businesses, the analysis 

will tend to understate business value and overstate 

the potential effect of compliance outlays on 

financial performance and business value.

terminate? and (2) would the year of 

termination change due to regulation? 

The economic life of a MODU is not 

limited by such considerations and the 

analysis for MODUs is accordingly 

simpler. The EA and the rulemaking 

record contain additional data and 

details on the methodology and 

assumptions used in these analyses.

a. MODUs 

EPA projects that 80 new jackups, 20 

new semi-submersibles, and three new 

drill ships will be constructed over the 

20 years for which new facility 

additions are analyzed. The economic 

impact analysis for these new MODUs is 

conducted at two levels: the vessel level 

and the firm level. EPA conducted two 

vessel-level analyses and one firm-level 

analysis: 

• The first vessel-level analysis is a 

closure analysis, which assesses 

changes in vessel cash flow and net 

income. Because the financial condition 

of new vessels is unknown, EPA used 

financial information from 

representative existing vessels, collected 

in EPA’s 316(b) survey of MODUs (DCN 

7–0008), to represent the financial 

characteristics of new facilities. The 

financial information from these 

representative vessels is used for a 

general assessment of how well these 

vessels would perform financially if 

costs of the proposed option applied. 

This analysis is used as an alternative 

assessment of the potential for a barrier 

to entry. 

• The second vessel-level analysis is 

a standard barrier-to-entry analysis for 

new facilities. This analysis computes 

the present value of estimated initial 

permitting costs, which are assumed to 

be incurred over five years prior to the 

incorporation of section 316(b) permit 

requirements in the applicable general 

permits (see DCN 7–4036) and are 

discounted to the year of compliance 

(the year the vessel is assumed to be 

launched). The one-time capital costs of 

compliance (assumed to be incurred in 

the year of compliance) are then added 

to this figure. These summed 

compliance costs are then compared to 

the baseline construction costs for each 

type of MODU. Neither recurring costs 

of compliance (e.g., repermitting costs 

or recurring capital costs of CWIS 

controls) nor recurring baseline costs 

(e.g., O&M, refitting costs) are 

considered in this analysis. The analysis 

compares baseline start-up costs and 

incremental start-up costs associated 

with the proposed rule. 

• The firm-level analysis is a cost-torevenue test which compares the 

annualized compliance costs for 

representative new vessels to the 

revenues of firms likely to construct 

MODUs, assuming each of these firms 

builds a share of the 103 new MODUs 

expected to be constructed over the 20-

year construction time frame. This 

analysis was conducted on a pre-tax and 

after-tax basis. 

i. Vessel-Level Closure Analysis 

To estimate potential closures (or 

more precisely, decisions not to proceed 

with constructing and placing a vessel 

into service) as a result of today’s 

proposal for new MODUs, EPA used 

two models: (1) A net income model, 

which computes the estimated present 

value of baseline after-tax net income 

(i.e., without compliance costs) for 

representative MODUs (based on survey 

data from existing MODUs) over a 30-

year operating period for each new 

facility,46 and (2) an after-tax cost 

calculation model, which estimates the 

present value of after-tax compliance 

costs using engineering and permitting 

cost inputs. Comparing the results of 

these two models shows the potential 

effect of costs on vessel net income.

EPA estimated after-tax net income 

for eight MODUs, using data provided 

by surveyed operators of existing 

MODUs (EPA received economic 

surveys for three semi-submersibles, 

three jackups, and two drill ships). EPA 

was only able to undertake financial 

analysis for those MODUs with a 

positive net income for the three years 

of financial information provided in the 

survey (2000 to 2002). EPA assumed 

that any MODU whose net income is 

negative over the three years is unlikely 

to be a viable operation in the baseline 

and cannot be analyzed with respect to 

compliance costs. 

EPA used the net income over the 

three years of survey data to create a 

moving cycle of net income over the 

period of analysis. Among the years of 

data collected (2000 to 2002), 2002 was 

generally a poor year of financial 

condition for the industry as a whole. 

EPA was thus able to represent industry 

financials in both good and bad years. 

The three-year cycle simulates the effect 

of volatility in oil and gas prices and 

other business conditions (e.g., rig 

utilization rates) over each facility’s 30-

year operating period. Future operating 

periods are likely to include major 

swings in the prices of oil and gas, the 

driving force behind the level of 

operations, rig pricing, and, thus, 

financial performance of the newly 

constructed vessels. EPA assumed that 

net income will be flat, on a three-year 

average basis, over the 30 years of 

analysis and thus did not apply any 

factors to increase or decrease net 

income over the years of analysis. The 

net income figures from the survey, 

therefore, repeat every three years for 30 

years. EPA then computed the present 

value of that stream of net income and 

compared it to the present value of aftertax compliance costs for the proposed 

option. 

EPA used the estimated compliance 

cost elements—capital, O&M, and 

permitting costs—for each new MODU 

to calculate the present value of the 

after-tax cost of compliance with today’s 

proposed requirements. Each 

compliance-related cost was accounted 

for in the year it is assumed to be 

incurred. Tax effects of compliance 

outlays were based on the owner 

company’s marginal tax rate as 

determined from the firm’s average 

taxable earnings over the three years of 

survey data (converted to a mid-year 

2003 basis). EPA calculated 

depreciation for the compliance capital 

outlay using the modified accelerated 

cost recovery system (MACRS) and 

included it in the pre-tax compliance 

cost stream. The compliance cost stream 

was then reduced by the amount of 

avoided tax liability, based on the 

estimated marginal tax rate, to yield the 

after-tax compliance cost stream (for 

more information on these calculations, 

see DCN 7–4016). The final result of 

these calculations is the present value of 

after-tax compliance costs.

The present value of after-tax 

compliance costs was then subtracted 

from the present value of baseline net 

income for the vessel. If the present 

value of net income remained positive 

68506 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

after accounting for compliance costs, 

EPA assumed that the MODU would 

operate post-compliance. If the present 

value of net income became negative, 

EPA assumed that the new MODU 

would not be a financially viable project 

and was counted as a potential 

‘‘regulatory closure.’’

The analysis is based on the 

assumption that costs cannot be passed 

through to customers. Because existing 

MODUs will not have to meet the 

requirements of the proposal, and new 

MODUs must compete with these 

existing MODUs, assuming zero cost 

pass-through provides a realistic 

estimate of potential economic impacts 

on new MODUs. 

This analysis found that no new 

MODUs (based on an assumption that 

finances for new MODUs will look like 

those for existing MODUs) would be a 

regulatory closure as a result of the 

incremental compliance costs associated 

with the proposed option (detailed 

results are provided in the CBI portion 

of today’s record; DCN 7–4020). 

ii.Vessel-Level Barrier-to-Entry Analysis 

The barrier-to-entry analysis 

compares the present value of 

compliance costs (including the present 

value of initial permitting costs 

discounted to the compliance year and 

first-time capital/installation costs, 

excluding recurring costs), to the costs 

of constructing a new MODU. If 

compliance costs comprised a small 

fraction of construction costs, EPA 

assumed that compliance costs would 

have no effect on the decision to build 

a new MODU. 

EPA developed incremental 

compliance costs for new MODUs using 

estimated initial permitting costs and 

technology cost estimates. The initial 

permitting costs are based on each new 

MODU’s share of regional permitting 

costs (EPA expects that facilities in a 

particular geographic region would 

collect data from representative 

facilities in that region) and individual 

administrative start-up and permit 

application costs. The technology costs 

are based on the weighted average cost 

of installing controls at existing 

MODUs, by type of MODU, for all 

existing MODUs with technical data. 

The estimated present value of the 

initial permitting cost stream, plus the 

first-time capital/installation costs of 

compliance costs, sum to $127,000 for 

semi-submersibles, $258,000 for 

jackups, and $247,000 for drill ships. 

According to IADC (May/June, 2003), 

the cost of new MODUs planned to be 

built in the next few years averages $250 

million for semi-submersibles and $125 

million for jackups. A drill ship 

completed in 1998 cost approximately 

$275 million (R&B Falcon’s Pathfinder). 

The present value of initial permitting 

costs plus one-time capital/installation 

compliance costs is therefore estimated 

to range from 0.05 percent to 0.21 

percent of construction costs for the 

three types of MODU. Because total upfront costs represent a very small 

fraction of total costs of construction 

(and even of contingency costs, which 

typically range from 10 percent to 20 

percent of capital costs), EPA believes 

that these costs would not have a 

material effect on decisions to build 

new MODUs.

iii. Firm-Level Cost-to-Revenue Analysis 

EPA’s research showed that firms 

likeliest to build MODUs with a design 

intake flow of greater than 2 MGD are 

those that currently own such MODUs. 

EPA identified seven firms owning 

jackups, semi-submersibles, or drill 

ships that would be subject to the 

proposed requirements for new facilities 

if newly constructed. They also are 

among the largest firms in the industry 

and are thus likely to be involved in 

new construction. EPA estimates that 

these seven firms would own the 103 

new MODUs subject to the proposed 

national requirements for new facilities. 

To determine the potential impact of the 

proposed option on the seven firms 

determined likely to build new MODUs 

subject to regulation, EPA used a costto-revenue test, which compares the 

annualized pre-tax and after-tax costs of 

compliance (calculated for 

representative new MODUs), with 2002 

revenues reported by these firms. 

Because nearly all of the firms (other 

than foreign-owned) are publicly 

owned, EPA relied on revenue data 

compiled from corporate 10K reports 

(see Chapter C2 of the EA). EPA then 

assigned a number of MODUs 

potentially subject to regulation to each 

of the firms and used the average perMODU compliance costs multiplied by 

the number of these MODUs to calculate 

the total compliance costs that might be 

faced by these firms. 

Estimated total annual pre-tax 

compliance costs are approximately 

$15,000 for a semi-submersible, $33,000 

for a jackup, and $37,000 for a drill 

ship. Estimated after-tax costs are 

approximately $10,000, $21,000, and 

$24,000, respectively, based on a 35 

percent marginal corporate tax rate 

assumption. These annualized costs are 

very small compared to the revenues a 

MODU might receive for drilling even 

one exploratory well in deepwater, 

which could approach $25 to $30 

million (DCN 7–4017). They are also 

small compared to the typical day rates 

(daily charges) paid to MODUs while 

drilling wells. These rates can range 

from $150,000 to $250,000 per day 

(DCN 7–4042). Five firms are assumed 

to build 12 jackups or semisubmersibles over the time frame of the 

analysis (approximately one MODU 

every other year). The two additional 

firms, GlobalSantaFe and Transocean, 

are the dominant firms in the industry. 

These two firms are each assumed to 

build 20 jackup or semi-submersibles, 

plus one drill ship and two drill ships, 

respectively, over the time frame of the 

analysis for a total of 21 or 22 MODUs 

in total. EPA used the higher cost of a 

jackup rig to represent the cost of 

compliance for both jackups and semisubmersibles. For simplicity, and to be 

conservative, EPA assumed that the 

annualized costs of compliance for all 

MODUs constructed over the period of 

analysis by each firm are incurred in 

one year for comparison to one year’s 

revenues. 

Using these assumptions, EPA 

estimates that the annualized pre-tax 

costs per firm range from $0.4 to $0.7 

million, and the after-tax costs range 

from $0.3 to $0.5 million. The pre-tax 

cost-to-revenue ratio ranges from 0.03 

percent to 0.06 percent, while the aftertax ratios range from 0.02 percent to 

0.04 percent. Given that the highest 

estimated ratio is 0.06 percent, EPA 

concludes that firm-level impacts would 

not pose a barrier to entry. 

b. Oil and Gas Production Platforms 

EPA projects that 20 deepwater 

platforms and one Alaska platform will 

be constructed over the 20 years over 

which new facility additions are 

analyzed. The economic impact analysis 

for these new platforms is conducted at 

two levels: the platform level and the 

firm level. EPA conducted two platformlevel analyses and one firm-level 

analysis: 

• The first platform-level analysis 

assesses the potential effects of 

compliance costs on platform operation. 

Two effects of the proposed option are 

considered: (1) A reduction in the 

expected economic value of the 

platform, driven by all costs of 

compliance, which could prevent oil 

and gas resources from being brought 

into production, and (2) earlier 

production shut-in, driven by the 

increase in O&M costs. The baseline 

operating and financial profile for this 

analysis is based on data from existing 

platforms whose cooling water intake 

rates would cause them to be subject to 

the proposed rule if they were being 

newly constructed after rule 

promulgation. These existing platforms 

serve as a baseline model of the 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68507

47Following engineering review of surveyed 

deepwater platforms/structures, only one was 

determined to have a total design CWIS intake flow 

rate meeting the proposed 316(b) thresholds for 

regulation of oil and gas facilities, had the structure 

been newly constructed, so only one model of 

deepwater structures was developed.

operating and financial conditions of 

new platforms that would be regulated 

under the proposal. Estimated 

compliance costs are added to the 

baseline cost profile in the analysis of 

compliance costs on platform 

operations. 

• The second platform-level analysis 

is a barrier-to-entry analysis for new 

facilities. This analysis compares the 

present value of estimated initial 

permitting costs plus the one-time 

capital costs of compliance (excluding 

any recurring costs) to the construction 

costs for each type of platform.

• The firm-level analysis is a cost-torevenue test, which compares the 

annualized compliance costs for 

representative new platforms to the 

revenues of firms likely to construct 

new platforms/structures. This analysis 

assumes that each firm likely to build a 

deepwater platform/structure subject to 

regulation would bring four platforms/

structures on line over the time frame of 

the analysis; and that only one firm will 

build an Alaska platform during the 

analysis period. For simplicity and to be 

conservative, firms assumed to bring 

four deepwater structures on line are 

assigned the annualized costs of 

compliance for four platforms in one 

year for comparison against one year’s 

revenues. This analysis was conducted 

on a pre-tax and after-tax basis. 

i. Platform-Level Production/Shut-In 

Analysis 

Compliance costs resulting from the 

proposed option may affect a platform’s 

financial performance and related 

operating decisions in two ways. First, 

increased costs from regulatory 

compliance will reduce the expected 

economic value of an oil and gas 

production project, and may prevent an 

otherwise financially viable project from 

being undertaken. Second, even if a 

project overall remains financially 

viable, increased operating costs may 

lead to an earlier production shut-in 

than would occur in the baseline. 

Details of the analysis of these effects 

are provided below. 

For the analysis of these effects, EPA 

constructed a general platform analysis 

model, which simulates the operations 

and economics of oil and gas 

development and production. The 

platform model analyzes production 

over a period extending as long as 30 

years. Pre-tax costs (including costs 

incurred in pre-production years, O&M, 

monitoring costs, and repermitting 

costs) are input into the model in the 

year in which they occur, until the 

model shows the platform is 

uneconomical to operate. To determine 

the shut-in year, projected net revenue 

is compared to operating costs in each 

production year. Net revenue is based 

on an assumed price of oil, current and 

projected production of oil and gas, well 

production decline rates, and severance 

and royalty rates. Operating costs are 

based on a calculated cost per barrel of 

oil equivalent (BOE) produced. The 

model simulates operations for the 

lesser of 30 years or to the year when 

operating costs exceed production 

revenue, at which point the operator is 

assumed to terminate production. The 

model calculates the lifetime of the 

project, total production, and the net 

present value of the operation (net 

income of the operation over the life of 

the project in terms of today’s dollars). 

A comparison of the baseline model 

outputs to the post-compliance model 

outputs yields any losses of production 

and project lifetimes and the net present 

value of the operation. If the net present 

value of the operation is positive in the 

baseline but negative post-compliance, 

the project is considered nonviable postcompliance. It is assumed the platform 

would not be built. 

The model uses as baseline data, 

financial information from 

representative existing platforms, 

collected in EPA’s 316(b) survey of 

production platforms (DCN 7–0008) to 

represent the financial characteristics of 

future platforms that would be subject 

to this proposed regulation. EPA 

received an economic survey from only 

one deepwater platform with cooling 

water intake structure flows meeting the 

proposed regulatory criteria. EPA used 

data from this survey and from other 

sources of publicly available 

information, such as the Minerals 

Management Service, to develop a 

model new deepwater oil and gas 

production platform. EPA also received 

a survey from a platform in Alaska but 

did not include it in the analysis 

because the surveyed platform is a very 

old structure and at the end of its 

productive life. It is likely that it would 

not be representative of new platforms 

being built after the Phase III rule is 

finalized. The Alaska platform is 

therefore analyzed only in the barrier to 

entry analysis. 

Analysis of Project Viability 

As noted above, any increase in costs, 

whether operating, capital, or 

permitting, will reduce the expected 

economic value of an oil and gas 

project, as represented by the present 

value of project net income, and may 

cause an otherwise economic oil and gas 

production project to never be 

undertaken. In this case, the entire 

economic value of the project and its 

otherwise recoverable oil and gas 

production are assumed to be lost (note: 

this loss need not be permanent but may 

only be delayed until higher product 

prices, or reduced development and 

production costs allow the project to 

become financially viable). For this 

potential impact, EPA analyzed whether 

the reduction in value from all 

regulatory compliance outlays would be 

sufficient to cause the expected 

discounted net income of an otherwise 

economically viable oil and gas 

production project to be negative—at 

the outset. In this case, the operator is 

assumed not to proceed with 

development and production. If the 

platform has a positive net present value 

under baseline conditions but a negative 

net present value in the postcompliance scenario, EPA notes an 

impact on the platform and estimates 

the lost production resulting from the 

costs of regulatory compliance.

Analysis of Production Shut-In Effects 

Although a project overall remains 

financially viable, the increased 

operating costs from regulatory 

compliance may lead to an earlier 

production shut-in than would occur in 

the baseline. Shut-in refers to lost 

production from non-production of 

producible reserves for reasons such as 

tests, repairs, or to await construction of 

gathering lines. Apart from the financial 

impact, an earlier shut-in will also lead 

to reduced production of otherwise 

economically recoverable oil and gas. 

For this analysis, projected net revenue 

is compared to operating costs at each 

year for the model project.47 Net 

revenue (after subtracting royalties and 

severance, which are payments to the 

lease owner and a State, if relevant) is 

based on an assumed price of oil, 

current and projected production of oil 

and gas, well production decline rates, 

and severance and royalty rates. 

Operating costs are based on a 

calculated cost per barrel of oil 

equivalent (BOE) produced. The model 

simulates operations for the lesser of 30 

years or to the year when operating 

costs exceed production revenue, at 

which point the operator is assumed to 

terminate production. A comparison of 

total production and total project 

lifetime in the baseline vs. postcompliance shows any differences in 

these variables following the imposition 

of compliance costs.

68508 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

48Costs are incurred assuming 20 years of new 

facility construction, with each facility incurring 

costs over a 30-year operating period, discounted to 

the year the facility is launched or comes on-line. 

The present value of private after-tax costs is less 

than the previously described present value of 

social costs, which are based on pre-tax costs, 

because of differences in the discounting for private 

costs and social costs. Private costs are discounted, 

for each analysis, only to the first year of 

compliance. In contrast, for the social cost 

calculation, all costs are discounted to the 

beginning of 2007, regardless of when new facilities 

come into operations. Because new facilities are 

scheduled to begin operation for a 20 year period 

following rule promulgation, the total effect of 

discounting is much greater for the present value 

of social cost calculation than for the private cost 

calculation. As a result, the present value of social 

costs, even though based on pre-tax costs, is less 

than the present value of private, after-tax cost.

This analysis found no impacts on 

deepwater oil and gas development or 

production as a result of the incremental 

compliance costs associated with the 

proposed option for the one platform 

that was analyzed. Impacts on net 

present value were very small. (Detailed 

results are included in the CBI portion 

of today’s record; DCN 7–4038.) 

ii. Platform-Level Barrier-to-Entry 

Analysis 

The barrier-to-entry analysis 

compares the present value of the initial 

permitting cost stream (discounted to 

the year of compliance) plus one-time 

capital/installation costs to the costs of 

constructing a new platform. If 

compliance costs comprise a small 

fraction of construction costs, EPA 

assumes that compliance costs would 

not have an effect on the decision to 

build a new platform. 

The estimated total present values of 

incremental compliance costs are 

$291,000 for deepwater projects and 

$685,000 for Alaska projects. Costs for 

constructing new deepwater platforms 

are estimated to range from $114 million 

to $2.3 billion (see EA for the Synthetic 

Drilling Fluid Effluent Limitations 

Guidelines in the rulemaking record, 

DCN 7–4017). For Alaska, EPA used a 

value of $120 million (DCN 7–4028). 

The ratio of incremental compliance 

costs to current total construction costs 

therefore ranges from 0.01 percent to 0.3 

percent for deepwater projects and 0.6 

percent for an Alaska project. Because 

this represents a small fraction of total 

construction costs (and even of 

contingency costs), EPA believes that 

these costs would not have a material 

effect on decisions to build new 

platforms. 

iii. Firm-Level Cost-to-Revenue Analysis 

To determine the potential impact of 

the proposed option on firms, EPA used 

a cost-to-revenue test, which compares 

the annualized pre-tax and after-tax 

costs of compliance (calculated for a 

representative new platform times the 

maximum number of platforms assumed 

built by each firm in any one year), with 

2002 revenues reported by all firms 

determined likely to be affected by this 

regulation. The firms that are 

considered affected are (1) those 

identified as currently having existing 

deepwater platforms or structures that 

would be subject to regulation if they 

were newly constructed and (2) the 

likeliest type of firm to build a new 

Alaska platform during the time frame 

of the analysis. EPA assumed each of 

the five firms operating in the 

deepwater Gulf would bring on-line four 

platforms during the period of analysis 

(for a total of 20 platforms). For 

simplicity and to be conservative, EPA 

assumes the four platforms come on line 

in one year for comparison with one 

year’s revenues at each firm. One small 

firm is assumed to build the one Alaska 

platform over the period of analysis, and 

the annualized compliance cost is also 

compared to one year’s revenues at that 

firm. 

Using these assumptions, EPA 

estimates that the annualized pre-tax 

costs per firm are about $0.3 million, 

and the after-tax costs are about $0.2 

million. The pre-tax cost-to-revenue 

ratio ranges from <0.001 percent to 0.01 

percent, while the after-tax ratios range 

from <0.001 percent to 0.007 percent. 

Given that the highest estimated ratio is 

0.01 percent, EPA concludes that firmlevel impacts would not pose a barrier 

to entry.

c. Total Facility Compliance Costs and 

Impacts for All New Offshore Oil and 

Gas Extraction Facilities 

Exhibit VIII–7 summarizes the total 

facility compliance costs and impacts 

associated with the proposed option for 

Phase III new offshore oil and gas 

extraction facilities. Annualized aftertax costs total $1.8 million per year for 

MODUs and $1.2 million per year for 

platforms, or a total of $3.1 million per 

year for all affected new oil and gas 

operations estimated to be constructed 

over the period of the analysis (using a 

7 percent discount rate).48

EXHIBIT VIII–7.—SUMMARY OF PRIVATE COSTS AND IMPACTS FOR NEW OIL AND GAS FACILITIES

Type of O&G facility Number of 

new facilities 

Annualized private after-tax 

compliance 

costs

(in millions, 

2003 $) 

Facility

impacts Firm impacts 

MODUs ............................................................................................................ 103 $1.8 0 0 

Platforms .......................................................................................................... 21 1.2 0 0 

Total .......................................................................................................... 124 3.1 0 0 

Note: Component values may not sum to the reported total due to independent rounding. 

C. Summary of Total Social Costs and 

Impacts 

As discussed earlier, EPA is 

proposing national categorical 

requirements for existing Phase III 

facilities, as defined by one of the three 

co-proposed flow-threshold-based 

options, and is proposing requirements 

similar to certain provisions of the rule 

for new offshore oil and gas extraction 

facilities. EPA estimated a total 

annualized social cost for the ‘‘50 MGD 

for All Waterbodies’’ option for existing 

facilities and the proposed option for 

new oil and gas extraction facilities of 

$51.0 million at a 3 percent discount 

rate, and $53.1 million, at a 7 percent 

discount rate. EPA estimates that 260 

facilities would be subject to national 

requirements and that none of these 

facilities would experience adverse 

impacts. Exhibit VIII–8 summarizes 

these findings.

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68509

EXHIBIT VIII–8.—SUMMARY OF ECONOMIC ANALYSIS: ‘‘50 MGD FOR ALL WATERBODIES’’ OPTION FOR EXISTING

FACILITIES PLUS NEW OFFSHORE OIL AND GAS FACILITIES > 2 MGD 

Annualized social cost

(in millions, 2003 $) Number of facilities subject 

to national

equirements 

Number of

facilities with 

3% Discount impacts* 

rate 

7% Discount 

rate 

Direct Compliance Cost: 

Manufacturing Industries .......................................................................... $42.7 $45.1 127 0 

Other Industries ........................................................................................ 4.1 4.4 9 0 

Electric Generators ................................................................................... N/A N/A N/A N/A 

New O&G Facilities .................................................................................. 3.2 2.7 124 0 

Total ................................................................................................... 50.0 52.2 260 0 

State and Federal Administrative Cost ............................................................ 1.0 0.9 ........................ ........................

Total Social Cost ...................................................................................... 51.0 53.1 ........................ ........................

* The impact measures for existing Manufacturers are facility closure and moderate financial impact (see also section VIII.A.3.a). The two impact measures for new Oil and Gas facilities are facility closures and barrier to entry (see also section VIII.B.3). Numbers may not add up to totals due to independent rounding. 

EPA estimated a total annualized 

social cost for the ‘‘200 MGD for All 

Waterbodies’’ option for existing 

facilities and the proposed option for 

new oil and gas extraction facilities of 

$26.4 million at a 3 percent discount 

rate, and $27.2 million, at a 7 percent 

discount rate. EPA estimates that 149 

facilities would be subject to national 

requirements and that none of these 

facilities would experience adverse 

impacts. Exhibit VIII–9 summarizes 

these findings.

EXHIBIT VIII–9.—SUMMARY OF ECONOMIC ANALYSIS: ‘‘200 MGD FOR ALL WATERBODIES’’ OPTION FOR EXISTING

FACILITIES PLUS NEW OFFSHORE OIL AND GAS EXTRACTION FACILITIES

Annualized social cost

(in millions, 2003 $) Number of facilities subject 

to national

requirements 

Number of

acilities with 

3% Discount impacts* 

rate 

7% Discount 

rate 

Direct Compliance Cost: 

Manufacturing Industries .......................................................................... $21.7 $23.1 23 0 

Other Industries ........................................................................................ 1.0 0.9 2 0 

Electric Generators ................................................................................... N/A N/A N/A N/A 

New O&G Facilities .................................................................................. 3.2 2.7 124 0 

Total ................................................................................................... 25.9 26.7 149 0 

State and Federal Administrative Cost ............................................................ 0.5 0.4 ........................ ........................

Total Social Cost ...................................................................................... 26.4 27.2 ........................ ........................

* The impact measures for existing Manufacturers are facility closure and moderate financial impact (see also section VIII.A.3.a). The two impact measures for new Oil and Gas facilities are facility closures and barrier to entry (see also section VIII.B.3). Numbers may not add up to totals due to independent rounding. 

EPA estimated a total annualized 

social cost for the ‘‘100 MGD for Certain 

Waterbodies’’ option for existing 

facilities and the proposed option for 

new oil and gas extraction facilities of 

$21.3 million at both a 3 percent and 7 

percent discount rate. EPA estimates 

that 143 facilities would be subject to 

national requirements and that none of 

these facilities would experience 

adverse impacts. Exhibit VIII–10 

summarizes these findings.

EXHIBIT VIII–10.—SUMMARY OF ECONOMIC ANALYSIS: ‘‘100 MGD FOR CERTAIN WATERBODIES’’ OPTION FOR EXISTING

FACILITIES PLUS NEW OFFSHORE OIL AND GAS EXTRACTION FACILITIES

Annualized social cost

(in millions, 2003 $) Number of facilities subject 

to national

requirements 

Number of

facilities with 

3% Discount impacts* 

rate 

7% Discount 

rate 

Direct Compliance Cost: 

Manufacturing Industries .......................................................................... $16.7 $17.4 17 0 

Other Industries ........................................................................................ 0.7 0.7 2 0 

Electric Generators ................................................................................... N/A N/A N/A N/A 

New O&G Facilities .................................................................................. 3.2 2.7 124 0 

68510 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

EXHIBIT VIII–10.—SUMMARY OF ECONOMIC ANALYSIS: ‘‘100 MGD FOR CERTAIN WATERBODIES’’ OPTION FOR EXISTING

FACILITIES PLUS NEW OFFSHORE OIL AND GAS EXTRACTION FACILITIES—Continued

Annualized social cost

(in millions, 2003 $) Number of facilities subject 

to national

requirements 

Number of

facilities with 

3% Discount impacts* 

rate 

7% Discount 

rate 

Total ................................................................................................... 20.7 20.8 143 0 

State and Federal Administrative Cost ............................................................ 0.6 0.5 ........................ ........................

Total Social Cost ...................................................................................... 21.3 21.3 ........................ ........................

* The impact measures for existing Manufacturers are facility closure and moderate financial impact (see also section VIII.A.3.a). The two impact measures for new Oil and Gas facilities are facility closures and barrier to entry (see also section VIII.B.3). Numbers may not add up to totals due to independent rounding. 

IX. Benefits Analysis 

A. Introduction 

This section presents EPA’s estimates 

of the national economic benefits of the 

three co-proposed regulatory options for 

the section 316(b) regulation for Phase 

III existing facilities: The ‘‘50 MGD for 

All Waterbodies’’ option, the ‘‘200 MGD 

for All Waterbodies’’ option, and the 

‘‘100 MGD for Certain Waterbodies’’

option. The benefits occur due to the 

reduction in impingement mortality and 

entrainment at cooling water intake 

structures affected by this rulemaking 

(see section II for a description of the 

facilities to which this rulemaking 

potentially applies). By reducing 

impingement mortality and 

entrainment, the co-proposed options 

would increase the number of fish, 

shellfish, and other aquatic life in local 

aquatic ecosystems. This, in turn, will 

directly and indirectly generate use 

benefits such as those associated with 

recreational and commercial fishing. 

Other types of benefits that are 

independent of any current or 

anticipated uses of the resource could 

also be realized; these are known as 

non-use values. Section IX.D provides 

an overview of types and sources of 

benefits anticipated, how these benefits 

were estimated, and what level of 

benefits have been estimated for each of 

the three co-proposed options. For a 

comparison of social benefits and total 

social costs, refer to Section X. 

To estimate the economic benefits of 

reducing impingement mortality and 

entrainment at cooling water intake 

structures, all the beneficial outcomes 

need to be identified and, where 

possible, quantified and assigned 

appropriate monetary values. Estimating 

economic benefits can be challenging 

because of the many steps of analysis 

that are necessary to link a reduction in 

impingement mortality and entrainment 

to changes in impacted fisheries and 

other aspects of relevant aquatic 

ecosystems, and then to link these 

ecosystem changes to the resulting 

changes in quantities and values for the 

associated environmental goods and 

services that ultimately are linked to 

human welfare. The methodologies used 

in the estimation of benefits of the 

proposed regulatory options are largely 

built upon those used for estimating 

benefits of the final rule for Phase II 

facilities (see 69 FR 41576). The 

Regional Benefits Assessment for the 

Proposed Section 316(b) Rule for Phase 

III Facilities (see DCN 7–0003), hereafter 

known as the Regional Analysis 

Document, provides EPA’s analyses for 

the benefit assessment for the proposed 

options. 

The benefit estimates for this rule are 

derived from a series of regional studies 

for a range of waterbody types 

throughout the U.S. Section IX.B 

provides detail on the regional study 

design. Sections IX.C and IX.D describe 

the methods EPA used to estimate 

impingement mortality and entrainment 

impacts at potentially regulated existing 

facilities and to derive an economic 

value of such losses. National benefits 

were estimated using a set of statistical 

weights for each potentially regulated 

facility. The weights were developed as 

part of EPA’s design of the survey of the 

industries. 

The benefit estimates presented in the 

following sections reflect changes in 

impingement mortality and entrainment 

reductions at existing facilities only. 

EPA was unable to assess benefits of 

reducing impingement and entrainment 

at new offshore oil and gas extraction 

facilities due to significant data gaps at 

the time of proposal. Therefore, the 

benefits estimates presented in this 

section should be compared only to the 

cost estimates for existing Phase III 

facilities. EPA solicits submission of 

data on impingement mortality and 

entrainment impacts at offshore oil and 

gas extraction facilities.

B. Study Design and Methods 

EPA’s evaluation of impingement 

mortality and entrainment data had four 

main objectives: (1) To develop a 

national estimate of the magnitude of 

impingement and entrainment at 

potentially regulated facilities; (2) to 

standardize impingement and 

entrainment rates using common 

biological metrics so that rates could be 

compared across species, years, 

facilities, and geographical regions; (3) 

to estimate changes in these metrics as 

a result of projected reductions in 

impingement and entrainment under 

the proposed rule options; and (4) to 

obtain data that can be used to estimate 

the national economic benefits of 

reduced impingement and entrainment. 

Harvested species were the main 

focus of EPA’s analysis, primarily 

because of the availability of economic 

methods for valuing these species. 

EPA’s approach to estimating changes in 

harvest assumed that impingement and 

entrainment losses result in a reduction 

in the number of harvestable adults in 

the years following the time that 

individual fish are killed by 

impingement and entrainment and that 

future reductions in impingement and 

entrainment will lead to future increases 

in fish harvest. This approach only 

estimates the incremental yield that is 

foregone because of the number of 

deaths due to impingement and 

entrainment and is not intended to 

provide an estimate of absolute 

population levels. EPA intends to 

investigate the feasibility of applying a 

population modeling approach to 

estimate expected changes in harvest 

levels and fish population sizes. Such 

an approach would use available data 

and life-stage specific estimates of 

natural mortality, impingement and 

entrainment mortality, and fishing 

mortality, plus an explicit function 

describing density-dependent 

reproductive success to attempt to 

estimate long-term changes in average 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68511

49 ‘‘Potentially regulated Phase III facilities’’ refers 

to all existing facilities with design intake flows 

greater than 2 MGD, not regulated in the Phase II 

rule.

harvest levels and stock sizes. A 

population model could serve as a 

supplement or as an alternative to the 

current modeling approach based on age 

one equivalent losses. EPA invites 

comment on ways that it might develop 

a population model to support an 

estimate of the national benefits of this 

rulemaking. 

1. Extrapolation of Impingement and 

Entrainment Rates 

To obtain a national estimate of losses 

at all potentially regulated facilities, it 

was necessary to extrapolate 

impingement and entrainment rates 

from facilities with data (model 

facilities) to facilities without data. 

Extrapolation of impingement and 

entrainment rates was necessary 

because not all potentially regulated 

facilities within a given region have 

conducted impingement and 

entrainment studies. Model facilities 

included both Phase II facilities and 

potentially regulated Phase III 

facilities,49 based on the assumption 

that impingement and entrainment rates 

at Phase II and Phase III facilities are 

similar after normalization by intake 

flow. Phase II facilities were included to 

make use of the largest possible data set 

and to accommodate the lack of 

impingement and entrainment data from 

potentially regulated Phase III facilities 

in some regions. Impingement and 

entrainment data from 72 Phase II 

facilities and 16 potentially regulated 

Phase III facilities were evaluated.

Impingement and entrainment data 

were extrapolated on the basis of 

operational intake flow in millions of 

gallons per day (MGD), where MGD is 

the average operational flow over the 

period 1996–1998 as reported by 

facilities in response to EPA’s survey of 

the industry. Operational flow at each 

facility was rescaled using factors 

reflecting the relative effectiveness of 

currently in-place technologies for 

reducing impingement and entrainment. 

The extrapolation procedure is 

described in Chapter A1 of Part A of the 

Regional Analysis Document. While 

there may be variations from these 

estimates in the actual losses (and 

benefits) per MGD across individual 

facilities, EPA believes that this method 

of extrapolation is a reasonable basis for 

developing an estimate of national-level 

benefits. 

2. Study Regions and Facilities 

EPA’s analysis examined cooling 

water intake structure impacts and 

regulatory benefits at the regional scale, 

and then combined regional results to 

develop national estimates. The Agency 

evaluated the benefits of the proposed 

regulatory options in six study regions 

based on the locations of potentially 

regulated Phase III facilities and 

similarities in the affected ecosystems, 

aquatic species present, and 

characteristics of commercial and 

recreational fishing activities within 

each region. The four coastal regions 

(California, North Atlantic, MidAtlantic, and Gulf of Mexico) 

correspond to those of the National 

Oceanographic and Atmospheric 

Association (NOAA) Fisheries agency 

(formerly the National Marine Fisheries 

Service). The Great Lakes region 

includes all potentially regulated Phase 

III facilities that withdraw water from 

Lakes Ontario, Erie, Michigan, Huron, 

and Superior, or are located on a 

waterway with open fish passage to a 

Great Lake and within 30 miles of the 

lake. The Inland region includes the 

remaining facilities that withdraw water 

from freshwater lakes, rivers, and 

reservoirs. Exhibit IX–1 indicates the 

number of potentially regulated Phase 

III facilities in each study region. The 

exhibit also shows the number of 

facilities subject to national technology 

requirements under each of the coproposed regulatory options.

EXHIBIT IX–1.—PHASE III FACILITIES IN EACH REGION

Region 

Number of potentially regulated existing 

phase III

facilities a

(weighted) 

Number of facilities subject to national

technology requirements under proposed

regulatory options b (weighted) 

50 MGD all 

waterbodies 

200 MGD all 

waterbodies 

100 MGD certain 

waterbodies 

California .......................................................................................................... 9 1 0 0 

North Atlantic ................................................................................................... 5 4 1 3 

Mid-Atlantic ...................................................................................................... 13 3 2 2 

South Atlantic ................................................................................................... 4 0 0 0 

Gulf of Mexico .................................................................................................. 11 7 2 7 

Great Lakes ..................................................................................................... 68 19 5 6 

Inland ............................................................................................................... 493 69 12 0 

Total, Study Regions ................................................................................ 599 103 22 18 

National total c ........................................................................................... 603 103 22 18 

aPotentially regulated existing Phase III facilities include electric generators with CWIS that withdraw more than 2 MGD but less than 50 MGD 

and manufacturers with CWIS that withdraw more than 2 MGD, that use at least 25% of the water for cooling purposes. b Numbers of facilities reflect only those that are subject to technology requirements; those facilities that only have permitting costs are excluded. cEighty potentially regulated facilities estimated to close under the baseline scenario are excluded from this analysis. 

3. Species Groups 

Life history data are very limited for 

many of the species that are impinged 

and entrained, and as a result, there are 

many data gaps for individual species. 

To overcome this limitation in its 

national benefit analysis, EPA used 

available life history data to construct 

representative life histories for groups of 

closely related species. Aggregation of 

species into groups of similar species 

with a common life history type 

facilitated parameterization of the 

fisheries models used by EPA to 

evaluate facility impingement and 

entrainment monitoring data. Groups 

were based on family groups and groups 

used by NOAA Fisheries for landings 

68512 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

50Ricker, W.E. 1975. Computation and 

interpretation of biological statistics of fish 

populations. Fisheries Research Board of Canada, 

Bulletin 191; Hilbourn, R. and C.J. Walters. 1992. 

Quantitative Fisheries Stock Assessment, Choice, 

Dynamics and Uncertainty. Chapman and Hall, 

London and New York; Quinn, T.J., II. and R.B. 

Deriso. 1999. Quantitative Fish Dynamics. Oxford 

University Press, Oxford and New York; Dixon, 

D.A. 1999. Catalog of Assessment Methods for 

Evaluating the Effects of Power Plant Operations on 

Aquatic Communities. Final Report. Report number 

TR–112013.

data. For example, bay goby, blackeye 

goby, yellowfin goby, and other gobies 

were grouped together as ‘‘gobies.’’ An 

exception was made for species of 

exceptionally high commercial or 

recreational value (e.g., striped bass), 

which were evaluated as single species. 

C. Impingement and Entrainment 

EPA’s analysis is based on facilityprovided biological monitoring data. As 

discussed in Chapter A2 of Part A of the 

Regional Analysis Document, there are 

several types of uncertainty associated 

with these data. Major sources of 

uncertainty are the imperfect precision 

and accuracy of impingement and 

entrainment data reported by facilities 

and of growth and mortality rates 

obtained from the scientific literature. 

This results from unavoidable sampling 

and measurement errors. While these 

uncertainties may lead to imprecision in 

impingement and entrainment 

estimates, EPA found no evidence of 

statistical bias. Given the goal of its 

benefit analysis, EPA believes that the 

data available from facility studies are 

sufficiently robust for developing 

estimates of the relative magnitude of 

impingement and entrainment 

nationwide. 

Using standard fishery modeling 

techniques,50 EPA constructed models 

that combined facility-derived 

impingement and entrainment counts 

with relevant life history data to derive 

estimates of (1) age-one equivalent 

losses (the number of individuals of 

different ages impinged and entrained 

by facility intakes expressed as an 

equivalent number of age-one fish), and 

(2) foregone fishery yield (pounds of 

commercial harvest and numbers of 

recreational fish and shellfish that are 

not harvested due to impingement and 

entrainment). In addition to direct 

losses of harvested species, estimates of 

foregone fishery yield include the yield 

of harvested species that is lost due to 

losses of forage species, which provide 

food for harvested species. Details of the 

methods used to calculate these metrics 

are provided in Chapter A1 of Part A of 

the Regional Analysis Document. For all 

analyses, EPA used the impingement 

and entrainment estimates provided by 

the facility and assumed 100 percent 

entrainment mortality based on the 

analysis of entrainment survival studies 

presented in Chapter A7 of Part A of the 

Regional Analysis Document. If there is 

some entrainment survival, this last 

assumption may lead to some 

overestimate of baseline entrainment 

losses.

1. Summary of Current Annual 

Impingement and Entrainment by 

Region 

Exhibit IX–2 presents EPA’s estimates 

of current annual impingement and 

entrainment (I&E) in the study regions.

EXHIBIT IX–2.—CURRENT ANNUAL IMPINGEMENT AND ENTRAINMENT, BY REGION

Region 

Impingement Entrainment Total I & E 

Age-1

equivalents 

Foregone

fishery yield

(lbs) 

Age-1

equivalents 

Foregone

fishery yield

(lbs) 

Age-1

equivalents 

Foregone

fishery yield

(lbs) 

California .................................................. 21,000 701 1,290,000 95,100 1,310,000 95,800 

North Atlantic ........................................... 20,100 141 2,320,000 44,800 2,340,000 45,000 

Mid-Atlantic .............................................. 3,890,000 540,000 19,400,000 381,000 23,200,000 920,000 

South Atlantic ........................................... 423,000 49,100 1,090,000 73,700 1,520,000 123,000 

Gulf of Mexico .......................................... 6,140,000 623,000 6,580,000 1,370,000 12,700,000 1,990,000 

Great Lakes ............................................. 31,800,000 413,000 2,570,000 76,400 34,400,000 489,000 

Inland ....................................................... 28,600,000 232,000 15,700,000 263,000 44,200,000 495,000 

National total a ................................... 70,900,000 1,860,000 48,900,000 2,300,000 120,000,000 4,160,000 

The estimates in Exhibit IX–2 make 

use of data from available impingement 

and entrainment studies conducted at 

both Phase II and Phase III facilities. 

Using data solely from the limited 

number of Phase III studies available (4 

studies for the Great Lakes region and 

11 studies for the Inland region), 

estimates of loss of age-1 equivalents to 

impingement and entrainment are 

5,160,000 at Great Lakes facilities and 

14,700,000 at Inland facilities. Estimates 

of foregone fishery yield are 16,500 

pounds at Great Lakes facilities and 

250,000 pounds at Inland facilities.

2. Summary of Annual Reductions in 

Impingement and Entrainment for Three 

Options 

Exhibit IX–3 presents EPA’s estimates 

of annual impingement and entrainment 

reductions under the ‘‘50 MGD for All 

Waterbodies’’ option. Exhibit IX–4 

presents EPA’s estimates of annual 

impingement and entrainment 

reductions under the ‘‘200 MGD for All 

Waterbodies’’ option. Exhibit IX–5 

presents results for the ‘‘100 MGD for 

Certain Waterbodies’’ option. 

a. Reductions in Annual Impingement 

and Entrainment for the ‘‘50 MGD for 

All Waterbodies’’ Option 

See Exhibit IX–3 for reductions in 

annual impingement and entrainment 

for the ‘‘50 MGD for All Waterbodies’’

option.

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68513

EXHIBIT IX–3.—REDUCTIONS IN ANNUAL IMPINGEMENT AND ENTRAINMENT FOR THE ‘‘50 MGD FOR ALL WATERBODIES’’

OPTION, BY REGION

Region Age-1

equivalents 

Foregone

fishery yield

(lbs) 

California .................................................................................................................................................................. 383,000 28,000 

North Atlantic ........................................................................................................................................................... 930,000 17,900 

Mid-Atlantic .............................................................................................................................................................. 13,400,000 600,000 

Gulf of Mexico .......................................................................................................................................................... 8,380,000 1,250,000 

Great Lakes ............................................................................................................................................................. 11,600,000 169,000 

Inland ....................................................................................................................................................................... 14,800,000 157,000 

National total ..................................................................................................................................................... 49,500,000 2,220,000 

The estimates in Exhibit IX–3 make 

use of data from available impingement 

and entrainment studies conducted at 

both Phase II and Phase III facilities. 

Using data solely from the limited 

number of Phase III studies available (4 

studies for the Great Lakes region and 

11 studies for the Inland region), 

estimates of reductions in loss of age-1 

equivalents to impingement and 

entrainment are 1,700,000 at Great 

Lakes facilities and 5,450,000 at Inland 

facilities. Estimates of reductions of 

foregone fishery yield are 5,570 pounds 

at Great Lakes facilities and 93,000 

pounds at Inland facilities. 

b. Reductions in Annual Impingement 

and Entrainment for the ‘‘200 MGD for 

All Waterbodies’’ Option 

See Exhibit IX–4 for reductions in 

annual impingement and entrainment 

for the ‘‘200 MGD for All Waterbodies’’

option.

EXHIBIT IX–4.—REDUCTIONS IN ANNUAL IMPINGEMENT AND ENTRAINMENT FOR THE ‘‘200 MGD FOR ALL WATERBODIES’’

OPTION, BY REGION

Region Age-1

equivalents 

Foregone

fishery yield

(lbs) 

California .................................................................................................................................................................. 0 0 

North Atlantic ........................................................................................................................................................... 198,000 3,800 

Mid Atlantic .............................................................................................................................................................. 11,900,000 534,000 

Gulf of Mexico .......................................................................................................................................................... 4,580,000 682,000 

Great Lakes ............................................................................................................................................................. 7,710,000 116,000 

Inland ....................................................................................................................................................................... 9,650,000 107,000 

National total ..................................................................................................................................................... 34,000,000 1,440,000 

The estimates in Exhibit IX–4 make 

use of data from available impingement 

and entrainment studies conducted at 

both Phase II and Phase III facilities. 

Using data solely from the limited 

number of Phase III studies available (4 

studies for the Great Lakes region and 

11 studies for the Inland region), 

estimates of reductions in loss of age-1 

equivalents to impingement and 

entrainment are 1,100,000 at Great 

Lakes facilities and 3,270,000 at Inland 

facilities. Estimates of reductions in 

foregone fishery yield are 3,690 pounds 

at Great Lakes facilities and 55,700 

pounds at Inland facilities. 

c. Reductions in Annual Impingement 

and Entrainment for the ‘‘100 MGD for 

Certain Waterbodies’’ Option 

See Exhibit IX–5 for reductions in 

annual impingement and entrainment 

for the ‘‘100 MGD for Certain 

Waterbodies’’ option.

EXHIBIT IX–5.—REDUCTIONS IN ANNUAL IMPINGEMENT AND ENTRAINMENT FOR THE ‘‘100 MGD FOR CERTAIN

WATERBODIES’’ OPTION, BY REGION

Region Age-1

equivalents 

Foregone

fishery yield

(lbs) 

California .................................................................................................................................................................. 0 0 

North Atlantic ........................................................................................................................................................... 754,000 14,500 

Mid Atlantic .............................................................................................................................................................. 11,900,000 534,000 

Gulf of Mexico .......................................................................................................................................................... 8,380,000 1,250,000 

Great Lakes ............................................................................................................................................................. 8,740,000 130,000 

National total ..................................................................................................................................................... 29,800,000 1,930,000 

The estimates in Exhibit IX–5 make 

use of data from available impingement 

and entrainment studies conducted at 

both Phase II and Phase III facilities. 

Using data solely from the limited 

number of Phase III studies available (4 

studies for the Great Lakes region), the 

estimate of reductions in loss of age-1 

equivalents to impingement and 

68514 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

51The benefits analysis of the proposed options 

for potentially regulated Phase III facilities does not 

assess option value as a distinct component of value 

because it is increasingly recognized that option 

value ‘‘cannot be a separate component of value’’

(Freeman, 2003; p. 249).

52The NOAA blue ribbon panel provided an 

extensive set of guidelines for survey construction, 

administration, and analysis to ensure that ‘‘* * * 

CV produces estimates reliable enough to be the 

starting point of a judicial process of damage 

assessment, including passive-use values [i.e. nonuse values]’’ (see FR 58:10 pp.4601–4614, 1993).

entrainment is 1,260,000 and the 

estimate of reductions in foregone 

fishery yield is 4,190 pounds at Great 

Lakes facilities.

d. Reductions in Annual Impingement 

and Entrainment for Other Policy 

Options 

EPA considered a wide range of 

policy options in developing the 

proposed section 316(b) regulation for 

the Phase III facilities. The Regional 

Analysis Document provides results for 

all evaluated options considered in this 

rulemaking. 

D. National Benefits 

1. Overview 

Economic benefits of the co-proposed 

options for the section 316(b) regulation 

for Phase III existing facilities can be 

broadly defined according to categories 

of goods and services provided by the 

species affected by impingement and 

entrainment by cooling water intake 

structures. 

The first category includes benefits 

that pertain to the use (direct or 

indirect) of the affected fishery 

resources. Use value reflects the value of 

all current direct and indirect physical 

uses of a good or service (Mitchell and 

Carson, 1989; DCN 5–1287). The direct 

use benefits can be further categorized 

according to whether or not affected 

goods and services are traded in the 

market. The ‘‘direct use’’ benefits of the 

section 316(b) regulation stem both 

from’’market’’ commodities (e.g., 

commercial fisheries) and from 

‘‘nonmarket’’ goods (e.g., recreational 

angling). Indirect use benefits also can 

be linked to either market or nonmarket 

goods and services—for example, the 

manner in which reduced impingement 

and entrainment-related losses of forage 

species leads through the aquatic 

ecosystem food web to enhance the 

biomass of species targeted for 

commercial (market) and recreational 

(nonmarket) uses. 

The second category includes benefits 

that are independent of any current or 

anticipated use of the resource; these are 

known as ‘‘non-use’’ or ‘‘passive use’’

values.51 Non-use values include 

‘‘nonmarketed’’ goods and services, 

which reflect human values associated 

with existence, bequest, and altruistic 

motives. Existence value is the value 

that individuals may hold for simply 

knowing that a particular good exists 

regardless of their present or expected 

use. For example, ecological goods and 

services such as diversity of aquatic and 

terrestrial species and habitat for 

threatened and endangered species are 

often valued for their existence. Bequest 

value exists when someone gains utility 

through the knowledge that an amenity 

will be available for others (family or 

future generations) in the future (Fisher 

and Raucher, 1984; DCN 4–0043). 

Altruistic values arise from 

interpersonal concerns (valuing the 

happiness that others get from enjoying 

the resource).

The economic value of benefits from 

the proposed options for Phase III 

facilities is estimated using a range of 

valuation methods, with the specific 

approach being dependent on the type 

of benefit category, data availability, and 

other suitable factors. Commercial 

fishery benefits are valued using market 

data. Recreational angling benefits are 

valued using a combination of primary 

and secondary research methods. 

Methodologies for estimating use values 

for recreational (non-market values) and 

commercial (market values) species are 

well developed, and some of these 

species have been extensively studied. 

As a result, these values are relatively 

easy to estimate. A detailed description 

of the approaches used for valuing 

commercial and recreational benefits of 

the proposed options can be found in 

Chapters A4 and A5 of the Regional 

Analysis Document. 

Estimating benefits from reduced 

impingement and entrainment of forage 

species is more challenging because 

these species are not targeted directly by 

commercial or recreational anglers and 

have no direct use values that can be 

observed in markets or inferred from 

revealed actions of anglers. To estimate 

a portion of the indirect use benefits 

from reducing impingement and 

entrainment losses to forage species, 

EPA used a trophic transfer model that 

translates changes in impingement and 

entrainment losses of forage fish into 

changes in the harvest of commercial 

and recreational species that are subject 

to impingement and entrainment (i.e., 

not the whole food web). This method 

is described in Chapter A1 of Part A of 

the Regional Analysis Document.

Stated preference methods, or benefit 

transfer based on stated preference 

studies, are the generally accepted 

techniques for estimating non-use 

values. 

Stated preference methods rely on 

carefully designed surveys, which ask 

people either to state their willingness 

to pay for particular ecological 

improvements, such as increased 

protection of aquatic species or habitats 

with particular attributes; or to choose 

between competing hypothetical 

‘‘packages’’ of ecological improvements 

and household cost. In either case, 

analysis of survey responses allows 

estimation of values. 

Economists generally consider nonuse values more difficult to assess than 

use values for several reasons: 

a. Non-use values are not associated 

with easily observable behavioral trails;

b. Non-use values may be held by 

both users and non-users of a resource, 

and non-users may be less familiar with 

particular services provided by affected 

resources; 

c. The development of a defensible 

stated preference survey that meets the 

NOAA blue ribbon panel requirements 

is often a time and resource intensive 

process,52 and

d. Even carefully designed surveys 

may be subject to certain biases 

associated with the hypothetical nature 

of survey responses (Mitchell and 

Carson 1989). 

Reducing impingement and 

entrainment losses of fish and shellfish 

may result in both use and non-use 

benefits. Of the organisms which are 

anticipated to be protected by the 

proposed options for the section 316(b) 

regulation for Phase III facilities, 

approximately 3.3 percent will 

eventually be harvested by commercial 

and recreational fishers and therefore 

can be valued with direct use valuation 

techniques. Unharvested fish, which 

have no direct use value, represent 96.7 

percent of the total loss. These unlanded 

fish include forage fish and the 

unlanded portion of the stock of 

harvested species. Because unlanded 

fish contribute to the yield of harvested 

fish, they have an indirect use value that 

is captured by the direct use value of the 

fish that are caught. However, this 

indirect use value represents only a 

portion of the total value of unlanded 

fish. In fact, society may value both 

landed and unlanded fish for reasons 

unrelated to their use value. Such nonuse values include the value that people 

may hold simply for knowing these fish 

exist. While non-use values are difficult 

to quantify, EPA believes it is important 

to consider such values, particularly 

since 96.7 percent of impinged and 

entrained organisms have no direct use 

value. 

EPA considered several approaches to 

quantifying non-use values for the 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68515

proposed rule, including a stated 

preference study and meta-analysis of 

surface water valuation studies. The 

Agency has begun exploring the 

development of a stated preference 

survey that would measure non-use 

benefits from reduced impingement and 

entrainment attributable to the proposed 

options for the section 316(b) regulation 

for Phase III facilities. Although this 

primary study effort could not be 

completed in time for the publication of 

the proposed regulation, EPA expects to 

complete the study in time to rely on its 

findings for the final regulation. A 

number of studies have found that metaanalysis has considerable promise in 

benefits transfer and that meta-analysis 

can produce more reliable results than 

other benefit transfer methods 

(Bergstrom and De Civita, 1999, DCN 6–

3109; Florax et al., 2002, pp. 117–135, 

DCN 7–5132). However, the usefulness 

of meta-analysis results is dependent on 

both the quality of the underlying 

studies and their applicability to the 

policy question at hand. Given the 

difficulties in estimating non-use 

benefits at the national level using 

benefit transfer methods and the small 

number of studies that have attempted 

to value fish losses, particularly those 

related to impingement and entrainment 

at cooling water intake sites, EPA has 

not included monetary measures of nonuse values in the benefit analysis for the 

proposed options. Instead, the Agency 

analyzed potential non-use benefits of 

the proposed options qualitatively.

2. Timing of Benefits 

Discounting is the economic 

conversion of future benefits and costs 

to their present values, accounting for 

the fact that individuals tend to value 

future outcomes less than comparable 

near-term outcomes. Discounting is 

important when the value of benefits (or 

costs) may vary from year to year and 

when the time profiles of benefits and 

costs are not the same. Discounting 

enables a consistent comparison of 

benefits to costs across time periods. 

For the section 316(b) rulemaking, the 

difference in timing in costs and 

benefits arises from two sources. First, 

facilities are not expected to achieve 

compliance with the regulation until 

several years after its promulgation. 

Benefits are equal to zero from the 

promulgation of the rule (i.e., beginning 

of 2007) until facilities reach 

compliance. Thus, EPA discounted the 

benefits from each facility by the 

number of years between the year in 

which the rule is promulgated and the 

year in which the facility complies. 

Since benefits were estimated on a 

regional basis, EPA estimated benefits 

from each facility by multiplying total 

regional benefits by the percentage of 

total regional flow that is attributable to 

each facility. EPA used current permit 

expiration information for model 

facilities to identify the projected year of 

compliance for each facility in the 

analysis. 

The second difference in timing in 

costs and benefits arises from the fact 

that additional time will pass between 

implementation of best technology 

available and resulting increased fishery 

yields. This is because one or more 

years may pass between the time an 

organism is spared impingement and 

entrainment and the time of its ultimate 

harvest. For example, a larval fish 

spared from entrainment (in effect, at 

age 0) may be caught by a recreational 

angler at age 3, meaning that a 3-year 

time lag arises between the installation 

of best technology available and the 

realization of the estimated recreational 

benefit. Likewise, if a 1-year old fish is 

spared from impingement and is then 

harvested by a commercial fisherman at 

age 2, there is a 1-year lag between the 

installation of best technology available 

and the subsequent commercial fishery 

benefit. 

Recognizing that avoided fish deaths 

occur mainly in fish that are younger 

than harvestable age (eggs, larvae and 

juveniles), and that the benefits from 

avoided impingement and entrainment 

of these fish would be realized typically 

3–4 years after their avoided death, EPA 

developed a benefits recognition 

schedule for facilities in each region. 

The benefits schedule is based on an 

estimate of benefit delay that reflects the 

estimated age and species composition 

of impingement and entrainment losses, 

by region. Following achievement of 

compliance, benefits from facilities in 

most regions are assumed to increase 

over a 7-year period to a long-term, 

steady State average, equal to the 

approximated per-facility benefit value 

discussed above, according to a 

numerical profile of < 0.0, 0.1, 0.2, 0.8, 

0.9, 0.95, 1.0 >. This profile indicates 

the fraction of the steady State benefit 

value that is realized in each of the first 

seven years following the achievement 

of compliance at a facility. After seven 

years, this fraction remains 1.0 for 23 

additional years. After these combined 

30 years the facility is assumed to cease 

compliance, which is consistent with 

the time period over which costs are 

evaluated. In the same way that the 

benefits profile builds up over time 

following compliance, the benefits 

profile declines at the end of the 

compliance period. Specifically, in the 

seven years following the end of 

compliance, the fraction of the steady 

State benefit value achieved follows the 

profile of < 1.0, 0.9, 0.8, 0.2, 0.1, 0.05, 

0.0 >. Therefore, the analysis of benefits 

encompasses a 37-year period starting 

with the first year of compliance. There 

are 35 years when benefits do not equal 

zero for a facility; 25 years when 

benefits are 100%; 10 years when 

benefits are a percentage of the total. 

These profile values are approximations 

based on a review of the age-specific 

fishing mortality rates that were used in 

the impingement and entrainment 

analysis and best professional judgment. 

Although EPA believes this approach is 

sufficient for this analysis, EPA could 

potentially refine these profile values 

through the use of a population model 

and will consider the feasibility of doing 

so. 

For regions with a relatively high 

contribution of impingement to total 

impingement and entrainment (Inland, 

Great Lakes, and the Gulf of Mexico 

regions), EPA used an adjusted benefits 

profile of < 0.1, 0.2, 0.8, 0.9, 0.95, 1.0 

>. This adjusted profile reflects that 

impinged fish are usually larger and 

older than entrained fish and thus 

benefits will be realized sooner in these 

regions. 

EPA used these profiles of benefits to 

calculate a total present value of 

benefits and then to calculate a constant 

annual equivalent value (annualized 

value) of the present value. EPA 

performed the calculations of present 

value and annualized value using two 

discount rate values: a rate of 3% and 

a rate of 7%. As described above, the 

time profile of benefits, and therefore 

the discounting analysis, varies by 

facility. For all facilities, the first year of 

the analysis is 2007 (the promulgation 

of the rule). However, the first year in 

which benefits are realized varies by 

facility. Following this year, as outlined 

above, benefits increase over a six-or 

seven-year period, remain constant until 

the 30th year, and then decline over a 

six-or seven-year period. For a detailed 

discussion of the discounting 

methodology, refer to Chapter A8, 

‘‘Discounting Benefits’’ and for a 

discussion of the time line of benefits, 

refer to Chapter H1, ‘‘Total National 

Benefits’’ in the Regional Analysis 

Document (DCN 7–0003). 

3. Recreational Fishing Valuation 

The recreational fishing benefits of 

the proposed options for the section 

316(b) rule for Phase III facilities were 

estimated for six study regions (North 

Atlantic, Mid-Atlantic, Gulf of Mexico, 

California, Great Lakes, Inland) based on 

similarities in the affected ecosystems, 

aquatic species present, and 

characteristics of recreational fishing 

68516 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

53No RUM model was generated in the Phase II 

analysis for the Inland region because of a lack of 

data for that region so we could not verify the metaanalysis results for the Inland region.

54The RUM models for the North Atlantic, MidAtlantic, Gulf of Mexico, and California have not 

changed from the Phase II analysis. The Great Lakes 

RUM model was slightly refined for the Phase III 

analysis. The main differences between the Phase 

III and Phase II models include: (1) The ability to 

estimate separate values for yellow perch and bass 

and (2) the inclusion of site amenity effects in the 

site choice model (Besedin et al., 2004: DCN 7–

5000).

55The RUM models produced lower estimated 

recreational benefits in the Gulf of Mexico, MidAtlantic, and California regions, and higher 

estimates in the Great Lakes and North Atlantic 

regions. But no RUM estimates were outside of the 

lower and upper bound meta analysis values 

computed using the Krinksy and Robb approach.

activities within each of the six regions. 

To estimate recreational benefits of the 

proposed options for Phase III facilities, 

EPA developed a benefit transfer 

approach based on a meta-analysis of 

recreational fishing valuation studies 

designed to measure the various factors 

that determine willingness-to-pay for 

catching an additional fish per trip. To 

validate the meta-analysis results, EPA 

also used regional models of 

recreational fishing behavior developed 

for the Phase II analysis (DCN 6–0003) 

to estimate benefits from reduced 

impingement and entrainment at 

potentially regulated Phase III facilities 

for the four coastal regions and the Great 

Lakes region.53

a. Valuation Methods for Recreational 

Fishing 

As the first step in its recreational 

fishing analysis, EPA conducted a 

comprehensive review of recreational 

fishing valuation literature to identify 

prior estimates of recreational use 

benefits that may be applicable to the 

section 316(b) regulation. Based on this 

review, EPA identified 48 studies that 

use established economic estimation 

techniques to measure the value of 

changes in marine or freshwater 

recreational catch (DCN 7–0003). All of 

these studies provide estimates of the 

marginal value to fishermen of catching 

an additional fish, or provide enough 

information for EPA to calculate such a 

value. 

To examine the relative influence of 

methodology, sample, and fishery 

characteristics on the marginal value of 

catching an additional fish, EPA 

conducted a regression-based metaanalysis of these 48 studies. Although 

the valuation studies include estimates 

for a large number of different species, 

for the purposes of the model these 

species were aggregated into groups of 

similar species, including four saltwater 

species groups (big game, small game, 

flatfish, and other saltwater), two 

anadromous species groups (salmon and 

steelhead trout), and six freshwater 

species groups (panfish, bass, walleye/

pike, muskellunge, rainbow trout, and 

other trout). The other saltwater group 

includes bottom fish species, species 

caught by anglers not targeting any 

particular species, and species that did 

not clearly fit in one of the other groups. 

The panfish group includes freshwater 

species such as yellow perch, catfish, 

and other warm water species. For the 

meta-analysis, some species groups 

were modeled interactively with 

regional variables to allow for variation 

in species value across different 

geographic regions. 

The regression results from this 

analysis reveal both statistically 

significant and intuitively correct 

patterns in the way that factors 

influence the value to fishermen of 

catching an additional fish. These 

results allow for calculation of the 

marginal value per fish for different 

species based on resource and policy 

context characteristics. Additional 

detail on the methods EPA used in this 

analysis can be found in Chapter A5 of 

the Regional Analysis Document.

b. Validating the Recreational Analysis 

Based on the Region-Specific RUM 

Models 

EPA also analyzed recreational fishing 

benefits from reduced impingement and 

entrainment based on region-specific 

random utility models (RUM) of 

recreational anglers’ behavior for the 

four coastal regions and the Great Lakes 

region. These models were initially 

developed by the Agency for analysis of 

the final section 316(b) regulation for 

Phase II facilities.54 For that regulation, 

EPA developed original RUM models 

for three of the four coastal regions 

(California, the Mid-Atlantic, and the 

Gulf of Mexico) and the Great Lakes 

region. For the North Atlantic region, 

EPA used a model developed by the 

National Marine Fisheries Service 

(NMFS) by Hicks et al. (Hicks, 

Steinback, Gautam, and Thunberg, 1999. 

Volume II: The Economic Value of New 

England and Mid-Atlantic Sportfishing 

in 1994—DCN 5–1271). Chapter A11 of 

the Phase II Regional Analysis 

Document provide more detailed 

discussion of the methodology used in 

EPA’s RUM analysis (DCN 7–0003).

The regional recreational fishing 

studies used information on recreational 

anglers’ behavior to infer anglers’

economic value for the quality of fishing 

in the case study areas. The models’

main assumption is that anglers will get 

greater satisfaction, and thus greater 

economic value, from sites where the 

catch rate is higher due to reduced 

impingement and entrainment, all else 

being equal. This benefit may occur in 

two ways: first, an angler may get 

greater enjoyment from a given fishing 

trip when catch rates are higher, and 

thus get a greater value per trip; second, 

anglers may take more fishing trips 

when catch rates are higher, resulting in 

greater overall value for fishing in the 

region. EPA modeled an angler’s 

decision to visit a site as a function of 

site-specific cost, fishing trip quality, 

and additional site attributes such as 

presence of boat launching facilities or 

fish stocking at the site. 

The Agency used 5-year historical 

catch rates per hour of fishing as a 

measure of baseline fishing quality in 

the regional studies. Catch rate is a 

policy variable of concern because catch 

rate is a function of fish abundance, 

which is affected by fish mortality 

caused by impingement and 

entrainment. 

The Agency used the estimated model 

coefficients in conjunction with the 

estimated changes in impingement and 

entrainment in a given region to 

estimate per-day welfare gain to 

recreational anglers due to the proposed 

regulatory options for Phase III facilities. 

For the North Atlantic region, EPA used 

model coefficients estimated by Hicks et 

al. (1999) (DCN 5–1271). 

To estimate the total economic value 

to recreational anglers for changes in 

catch rates resulting from changes in 

impingement and entrainment in a 

given region, EPA multiplied the total 

number of fishing days for a given 

region by the estimated per-day welfare 

gain due to the regulation. EPA 

estimated that the proposed regulatory 

options for Phase III facilities would 

cause only negligible changes in 

recreational fishing participation due to 

the improved quality of the fishing sites. 

Therefore, the welfare estimates for the 

four coastal regions and the Great Lakes 

are based on estimates of baseline 

recreational fishing participation 

provided by NOAA Fisheries and the 

Fish and Wildlife Service’s Annual 

Survey of Fishing, Hunting, and 

Wildlife-Related Recreation (U.S. 

Department of the Interior, 2001, DCN 

6–3231). 

Results of the RUM models are 

presented in Chapter B4 through F4 of 

the Regional Analysis Document. In 

general, the RUM-based results fall 

within the range of values estimated 

based on the meta-model.55 That the 

values from the two independent 

analyses are relatively close 

corroborates the use of meta-analysis in 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68517

estimating the value of incremental 

recreational fishing improvments 

resulting from the proposed section 

316(b) regulation for Phase III facilities.

c. Application of the Meta-Analysis 

Results to the Analysis of Recreational 

Benefits of the Proposed 316(b) Rule

This section briefly discusses the use 

of the meta-analysis results to estimate 

the recreational benefits of the 

regulatory options evaluated for the 

proposed rule. Additional detail on this 

analysis, including EPA’s treatment of 

uncertainty in per fish values, can be 

found in the Regional Analysis 

Document in Chapter A5. EPA began by 

calculating per fish values from the 

meta-analysis regression coefficients, 

based on regional and species specific 

values of the input variables. Because 

estimates from regression meta-models 

are subject to uncertainty, EPA used the 

Krinksy and Robb approach to estimate 

lower and upper bound marginal values 

for each species (DCN 6–3160). EPA also 

conducted a sensitivity analysis to 

determine how per fish values could 

change based on different selections for 

the independent variables. The per fish 

values and bounds used in this analysis 

of the recreational benefits of the 

regulatory options are based on EPA’s 

best estimates of values for independent 

variables. The resulting per fish values 

are presented in Exhibit IX–6.

EXHIBIT IX–6.—ESTIMATED MARGINAL VALUE PER FISH TO RECREATIONAL ANGLERS

Region 

Marginal value per fish caught, by region: saltwater fish a (June 2003 $) 

Small game Flatfish Other saltwater b

California .......................................................................... $12.57 $15.61 $4.52 

North Atlantic ................................................................... 7.64 8.06 4.20 

Mid-Atlantic ...................................................................... 6.87 6.91 3.73 

Gulf of Mexico .................................................................. 5.32 .................... 2.88 

Marginal value per fish caught, by region: freshwater fish a (June 2003 $) 

Region Small 

game c

Walleye/

Pike 

Bass Panfish Salmon Trout d

Great Lakes ..................................................................... $4.58 $5.90 $1.06 $11.19 $7.99 

Inland ............................................................................... $7.38 5.15 6.96 0.97 .................... 2.79 

a Marginal values per fish are presented only for species in regions in which they are affected by one of the regulatory options evaluated for 

the proposed rule. b Other saltwater species include bottom fish and other miscellaneous species. c Anadromous species such as striped bass and American shad can be found in freshwater coastal rivers as well as in saltwater. 

d The trout category includes all trout species except rainbow trout and lake trout. 

To estimate the benefits of the 

alternative regulatory options, EPA 

multiplied the per fish values from 

Exhibit IX–6 by the number of 

additional fish that would be caught by 

anglers under each regulatory option 

due to reductions in impingement and 

entrainment, compared to current levels 

of recreational catch. Exhibits IX–7, IX–

8, and IX–9 present the results of these 

calculations for the ‘‘50 MGD for All 

Waterbodies,’’ ‘‘200 MGD for All 

Waterbodies,’’ and ‘‘100 MGD for 

Certain Waterbodies’’ options. The 

proportion of impingement and 

entrainment losses of fishery species 

that were valued as lost recreational 

catch was determined from stockspecific fishing mortality rates, which 

indicate the fraction of a stock that is 

harvested by recreational anglers. 

Because fishing mortality rates are 

typically less than 20 percent, a 

proportion of the losses of fishery 

species were not valued in the 

recreational benefits analysis. 

Exhibit IX–7 shows the annual 

increase in total recreational catch and 

resulting monetized benefits resulting 

from the ‘‘50 MGD for All Waterbodies’’

option. The exhibit shows that 

compared to the current national level 

of recreational catch, anglers would 

catch 620,000 additional fish per year 

under this option, resulting in total 

undiscounted benefits of $2.12 million 

per year. The annualized value of these 

additional fish is $1.77 million and 

$1.39 million, evaluated at 3 percent 

and 7 percent discount rates, 

respectively. Increased recreational 

catch is largest in the Gulf of Mexico 

region, where the rule would increase 

annual recreational catch by 183,000 

fish, resulting in an undiscounted 

recreational welfare gain of $0.67 

million.

Exhibit IX–7 also presents lower and 

upper confidence bounds for the 

benefits of the ‘‘50 MGD for All 

Waterbodies’’ option. These bounds are 

based on using the Krinsky and Robb 

technique to estimate the 95th and 5th 

confidence limits on the marginal value 

per fish predicted by the meta-analysis. 

Undiscounted national benefits of this 

option range from $1.02 million to $4.47 

million per year, and benefits in the 

Gulf of Mexico region range from $0.30 

million to $1.50 million per year, based 

on 90 percent confidence limits on the 

marginal value per fish predicted by the 

meta-analysis.

EXHIBIT IX–7.—RECREATIONAL BENEFITS UNDER THE ‘‘50 MGD FOR ALL WATERBODIES’’ OPTION

Region 

Increase in annual recreational catch 

compared to 

current recreational catch

(thousands of 

fish) 

Annualized benefits

(thousands, 2003 $) a

Low Mean High 

California .......................................................................................................... 5 $12 $28 $66 

68518 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

EXHIBIT IX–7.—RECREATIONAL BENEFITS UNDER THE ‘‘50 MGD FOR ALL WATERBODIES’’ OPTION—Continued

Region 

Increase in annual recreational catch 

compared to 

current recreational catch

(thousands of 

fish) 

Annualized benefits

(thousands, 2003 $) a

Low Mean High 

North Atlantic ................................................................................................... 13 36 77 169 

Mid-Atlantic ...................................................................................................... 159 290 612 1,301 

Gulf of Mexico .................................................................................................. 183 298 667 1,499 

Great Lakes ..................................................................................................... 92 192 385 756 

Inland ............................................................................................................... 167 189 358 675 

National total (undiscounted) b ......................................................................... 620 1,016 2,127 4,466 

National total (evaluated at 3%) c .................................................................... 620 843 1,765 3,704 

National total (evaluated at 7%) c .................................................................... 620 665 1,391 2,919 

a Lower and upper bounds are calculated using the Krinsky and Robb technique to estimate the 95th and 5th percentile limits on the marginal 

value per fish predicted by the meta-analysis. b Undiscounted benefits are calculated from the annual increase in recreational catch, evaluated at a steady State condition. All regional results 

presented in this table are undiscounted. Undiscounted benefits are not directly comparable to cost. cAnnualized benefits represent the value of all recreational benefits generated over the time frame of the analysis, discounted to 2007, and 

then annualized over a thirty year period. For a more detailed discussion of the discounting methodology, refer to section IX.D.2 of this preamble. 

Exhibit IX–8 shows the annual 

increase in recreational catch and 

resulting monetized benefits resulting 

from the ‘‘200 MGD for All 

Waterbodies’’ option. The exhibit shows 

that compared to the current national 

level of recreational catch, anglers 

would catch 419,000 additional fish per 

year under this option, resulting in total 

undiscounted benefits of $1.43 million 

per year. The annualized value of these 

additional fish is $1.18 million and 

$0.92 million, evaluated at 3 percent 

and 7 percent, respectively. Increased 

recreational catch is largest in the MidAtlantic region, where this option 

would increase annual recreational 

catch by 141,000 fish, resulting in an 

undiscounted welfare gain of $0.55 

million. 

The exhibit also presents lower and 

upper confidence bounds for the 

benefits of the ‘‘200 MGD for All 

Waterbodies’’ option. Undiscounted 

national benefits of this option range 

from $0.69 million to $2.99 million per 

year, and benefits in the Mid-Atlantic 

region range from $0.26 million to $1.16 

million per year, based on 90 percent 

confidence limits on the marginal value 

per fish predicted by the meta-analysis.

EXHIBIT IX–8.—RECREATIONAL BENEFITS UNDER THE ‘‘200 MGD FOR ALL WATERBODIES’’ OPTION

Region 

Increase in annual recreational catch 

compared to 

current recreational catch

(thousands of 

fish) 

Annualized benefits (thousands, 2003 $) a

Low Mean High 

California .......................................................................................................... 0 $0 $0 $0 

North Atlantic ................................................................................................... 3 8 16 36 

Mid-Atlantic ...................................................................................................... 141 258 545 1,158 

Gulf of Mexico .................................................................................................. 100 163 364 819

Great Lakes ..................................................................................................... 64 132 266 523 

Inland ............................................................................................................... 111 128 242 456 

National total (undiscounted) b ......................................................................... 419 689 1,434 2,991 

National total (evaluated at 3%) c .................................................................... 419 567 1,181 2,463 

National total (evaluated at 7%) c .................................................................... 419 443 922 1,922 

a Lower and upper bounds are calculated using the Krinsky and Robb technique to estimate the 95th and 5th percentile limits on the marginal 

value per fish predicted by the meta-analysis. b Undiscounted benefits are calculated from the annual increase in recreational catch, evaluated at a steady State condition. All regional results 

presented in this table are undiscounted. Undiscounted benefits are not directly comparable to cost. cAnnualized benefits represent the value of all recreational benefits generated over the time frame of the analysis, discounted to 2007, and 

then annualized over a thirty year period. For a more detailed discussion of the discounting methodology, refer to section IX.D.2 of this preamble. 

Exhibit IX–9 shows the annual 

increase in recreational catch and 

resulting monetized benefits resulting 

from the ‘‘100 MGD for Certain 

Waterbodies’’ option. The exhibit shows 

that compared to the current national 

level of recreational catch, anglers 

would catch 407,000 additional fish per 

year under this option, resulting in total 

undiscounted benefits of $1.57 million 

per year. The annualized value of these 

additional fish is $1.29 million and 

$1.01 million, evaluated at 3 percent 

and 7 percent, respectively. Increased 

recreational catch is largest in the Gulf 

of Mexico, where this option would 

increase annual recreational catch by 

183,000 fish, resulting in an 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68519

undiscounted welfare gain of $0.67 

million. 

The exhibit also presents lower and 

upper confidence bounds for the 

benefits of the ‘‘100 MGD for Certain 

Waterbodies’’ option. Undiscounted 

national benefits of this option range 

from $0.73 million to $3.38 million per 

year, and benefits in the Gulf of Mexico 

region range from $0.30 million to $1.50 

million per year, based on 90 percent 

confidence limits on the marginal value 

per fish predicted by the meta-analysis.

EXHIBIT IX–9.—RECREATIONAL BENEFITS UNDER THE ‘‘100 MGD FOR CERTAIN WATERBODIES’’ OPTION

Region 

Increase in annual recreational catch 

compared to 

current recreational catch

(thousands of 

fish) 

Annualized benefits

(thousands, 2003 $) a

Low Mean High 

California .......................................................................................................... 0 $0 $0 $0 

North Atlantic ................................................................................................... 11 29 63 137 

Mid-Atlantic ...................................................................................................... 141 258 545 1,158 

Gulf of Mexico .................................................................................................. 183 298 667 1,499 

Great Lakes ..................................................................................................... 72 148 299 586 

Inland ............................................................................................................... 0 0 0 0 

National total (undiscounted) b ......................................................................... 407 733 1,573 3,380 

National total (evaluated at 3%) c .................................................................... 407 602 1,292 2,779 

National total (evaluated at 7%) c .................................................................... 407 468 1,006 2,164 

a Lower and upper bounds are calculated using the Krinsky and Robb technique to estimate the 95th and 5th percentile limits on the marginal 

value per fish predicted by the meta-analysis. b Undiscounted benefits are calculated from the annual increase in recreational catch, evaluated at a steady State condition. All regional results 

presented in this table are undiscounted. Undiscounted benefits are not directly comparable to cost. cAnnualized benefits represent the value of all recreational benefits generated over the time frame of the analysis, discounted to 2007, and 

then annualized over a thirty year period. For a more detailed discussion of the discounting methodology, refer to section IX.D.2 of this preamble. 

d. Limits and Uncertainties 

Benefit transfers by definition are 

characterized by a difference between 

the context in which resource values are 

estimated and that in which benefit 

estimates are desired. The ability of 

meta-analysis to adjust for the influence 

of study, economic, and resource 

characteristics on recreational values 

can minimize, but not eliminate, 

potential biases. The meta-analysis 

model presented here provides a close 

but not perfect match to the context in 

which values are desired. Some of the 

key limitations inherent to the metamodel and the subsequent benefit 

transfer are the following: 

A. The per fish values estimated from 

the model depend on the values of the 

input variables in the meta-analysis. 

EPA assigned values to the input 

variables based on established economic 

theory and characteristics of the affected 

species and regions. However, because 

the input values for some variables are 

uncertain, the resulting per fish values 

and benefits estimates are also 

uncertain. 

B. As mentioned above, the economic 

and resource characteristics of the 48 

studies used in the meta-analysis are not 

perfectly matched to the economic and 

resource characteristics of sites affected 

by the regulatory options evaluated for 

the proposed rule. In particular, 

although most of the Inland studies take 

place in the Great Lakes region, the 

regulatory options affect sites all across 

the Inland region. However, EPA 

believes that regional differences in per 

fish values for specific Inland species 

are relatively small. 

C. By aggregating species into 

categories, EPA was able to improve the 

fit of the meta-analysis model. However, 

this aggregation results in a lower level 

of detail in the values that can be 

predicted. In particular, the panfish 

category and other saltwater category 

include relatively diverse species. 

D. Projected changes in recreational 

catch may be overestimated because 

potential compensatory effects in 

affected species’ reproduction or 

survival rates were not taken into 

account. 

E. In estimating recreational fishery 

losses, EPA used impingement and 

entrainment data provided by the 

facilities. While EPA used the most 

current data available, in some cases 

these data are 20 years old or older. 

Thus, they may not reflect current 

conditions. Also, data from Phase II 

facilities may not be representative of 

Phase III facilities. 

F. Impingement and entrainment 

estimates include only individuals 

directly lost to impingement and 

entrainment, not their progeny, and may 

therefore be underestimates. 

G. In estimating the benefits of 

improved recreational angling, the 

Agency only assigned a monetary 

benefit to the increases in consumer 

surplus for the baseline number of 

fishing days. Thus, benefits will be 

understated if participation increases in 

response to increased availability of 

fishery species as a result of reduced 

impingement and entrainment. This 

approach omits the portion of 

recreational fishing benefits that arise 

when improved conditions lead to 

higher levels of participation. Empirical 

evidence suggests that the omission of 

increased angling days can lead to an 

underestimate of total recreational 

fishing benefits. However, the 

magnitude of this error is likely to be 

small. 

4. Commercial Fishing Valuation 

Reductions in impingement and 

entrainment at cooling water intake 

structures are expected to benefit the 

commercial fishing industry. The effect 

is straightforward: Reducing the number 

of fish killed will probably increase the 

number of fish available for harvest. 

Measuring the benefits of this effect is 

less straightforward. This section 

presents the methods EPA used to 

estimate commercial benefits, as well as 

the resulting benefits estimates.

a. Methods 

EPA estimated commercial benefits by 

first estimating the value of total losses 

under current impingement and 

entrainment conditions (or the total 

68520 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

benefits of eliminating all impingement 

and entrainment). Then, based on 

review of the empirical literature, EPA 

assumed that producer surplus is equal 

to 40 percent of baseline losses. Finally, 

EPA estimated benefits under different 

options for the proposed section 316(b) 

rule for Phase III facilities by applying 

the estimated percentage reduction in 

impingement and entrainment to the 

estimated producer surplus to obtain the 

estimated increase in producer surplus 

attributable to the option. This 

methodology was applied in each region 

except the Inland region (which does 

not include any significant commercial 

fishing). See Chapter A4 of the Regional 

Analysis Document for details about 

EPA’s methodology. 

To determine regional losses and 

benefits, EPA conducted several 

analyses. EPA estimated losses to 

commercial harvest (in pounds of fish) 

attributable to impingement and 

entrainment under current conditions 

by modeling these fish losses by 

applying a linear stock-to-harvest 

assumption (i.e., a 10 percent change in 

the stock would result in a 10 percent 

change in harvest). The percentage of 

fish harvested is based on data on 

historical fishing mortality rates. EPA 

estimated gross revenue of lost 

commercial catch (i.e., the increase in 

gross revenue that would be expected if 

all current impingement and 

entrainment were eliminated) by using 

landings and dockside prices ($/lb) as 

reported by the NOAA Fisheries for the 

period 1991–2001. The conceptually 

suitable measure of benefits is the sum 

of any changes in producer and 

consumer surplus. The methods used 

for estimating the change in surplus 

depend on whether the physical impact 

on the commercial fishery market 

appears sufficiently small such that it is 

reasonable to assume there will be no 

appreciable price changes in the 

markets for the impacted fisheries. 

For the regions and magnitude of 

losses included in this analysis, it is 

reasonable to assume no change in 

price, which implies that the welfare 

change is limited to changes in producer 

surplus. This change in producer 

surplus is assumed to be equivalent to 

a portion of the change in gross 

revenues. EPA assumes a range of 0 

percent to 40 percent of the estimated 

gross revenue losses as a means of 

estimating the change in producer 

surplus. This is based on a review of 

empirical literature and is consistent 

with recommendations made in 

comments on the Phase II proposal. 

EPA believes this is a reasonable 

approach to estimating producer surplus 

when there are no anticipated price 

changes. EPA’s (2000) Guidelines for 

Preparing Economic Analyses (EPA 

240–R–00–003) describes options for 

estimating ecological benefits for 

fisheries, and notes that ‘‘if changes in 

service flows are small, current market 

prices can be used as a proxy for 

expected benefit * * * a change in the 

commercial fish catch might be valued 

using the market price for the affected 

species.’’ In EPA’s review of the 

commercial fishing literature two 

alterative methods for computing 

producer surplus as a percentage of 

gross revenues also came to the fore. 

The more common approach to 

calculating benefits relies on estimating 

normal profit as a percentage of gross 

revenue. In the surveyed studies this 

percentage of gross review ranges from 

-5 percent to 91.2 percent. The second 

approach to estimating commercial 

benefits, which may produce the more 

appropriate measure of welfare, 

computes the producer surplus as a 

percentage of gross revenue. The studies 

that use this method return percentages 

that range from 0 to 37, due to reduced 

profit estimates that include a return to 

the owners as part of costs. In light of 

these findings EPA has chosen to use 0 

percent to 40 percent as the estimated 

range of percent of gross revenue that 

best captures the additional benefit that 

will accrue to commercial fishers. 

Once the commercial surplus losses 

associated with impingement and 

entrainment under baseline conditions 

have been estimated, EPA estimates the 

percentage reduction in impingement 

and entrainment at each facility under 

each regulatory option. This analysis is 

conducted for each region. 

b. Results 

Exhibit IX–10 presents the estimated 

annualized commercial fishing benefits 

attributable to three co-proposed 

options: The ‘‘50 MGD for All 

Waterbodies’’ option (50 MGD All); the 

‘‘200 MGD for All Waterbodies’’ option 

(200 MGD All); and the ‘‘100 MGD for 

Certain Waterbodies’’ option (100 MGD 

oceans, estuaries, tidal rivers, or one of 

the Great Lakes). The results reported 

include the total reduction in losses in 

pounds of fish and the value of this 

reduction discounted at 0 percent, 3 

percent, and 7 percent. Total annualized 

commercial fishing benefits, applying a 

3 percent discount rate, are estimated to 

be $0 to $132,000 per year for the 50 

MGD option, $0 to $79,000 per year for 

the 200 MGD option, and $0 to $118,000 

per year for the 100 MGD for certain 

waterbodies option. When a 7 percent 

discount rate is applied, the total 

annualized commercial fishing benefits 

for the 50 MGD option are estimated to 

be $0 to $104,000, under the 200 MGD 

option benefits equal $0 to $79,000, and 

for the 100 MGD for certain waterbodies 

option the discounted benefits are $0 to 

$93,000.

EXHIBIT IX–10.—ANNUALIZED COMMERCIAL FISHING BENEFITS FOR IMPINGED AND ENTRAINED FISH EXPECTED UNDER

THE CO-PROPOSED OPTIONS a

Region b

Reduction in lost yield (thousands of lbs) Benefits (thousands; $ 2003) c d

50 MGD

all 

200 MGD 

all 

100 MGD 

certain 

waterbodies 

50 MGD

all 

200 MGD 

all 

100 MGD 

certain 

waterbodies 

California .......................................................................... 16 0 0 $6 $0 $0 

North Atlantic ................................................................... 8 2 6 4 1 3 

Mid-Atlantic ...................................................................... 459 408 408 31 27 27 

Gulf of Mexico .................................................................. 313 171 313 93 51 93 

Great Lakes ..................................................................... 86 59 66 25 17 19 

National total,e (undiscounted) ........................................ 882 640 794 159 96 143 

National total, (evaluated at 3%) ..................................... 882 640 794 132 79 118 

National total, (evaluated at 7%) ..................................... 882 640 794 104 62 93 

aBenefits are upper bound benefits based on 40% of gross revenue. The lower bound is $0. 

b No significant commercial fishing takes place in the Inland region, and thus this region is excluded from this analysis. 

c Discounted to account for lag in implementation and lag in time required for fish lost to I&E to reach a harvestable age. 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68521

dAnnualized benefits represent the value of all commercial benefits generated over the time frame of the analysis, discounted to 2007, and 

then annualized over a thirty year period. For a more detailed discussion of the discounting methodology, refer to Section IX.D.2 of this preamble. e Undiscounted benefits are not comparable to costs. 

c. Limitations and Uncertainties 

Some of the major uncertainties and 

assumptions of EPA’s commercial 

fishing analysis include: 

A. The analysis only includes 

individuals that are directly killed by 

impingement and entrainment, not their 

progeny and may therefore 

underestimate projected changes in 

harvest.

B. Projected changes in commercial 

catch may be overestimated because 

potential compensatory effects in 

affected species’ reproduction or 

survival rates were not taken into 

account. 

C. Projected changes in harvest may 

be too high or too low because 

interactions with other stressors are not 

considered. 

D. EPA used impingement and 

entrainment data provided by the 

facilities. While EPA used the most 

current data available, in some cases 

these data are 20 years old or older. 

Thus, they may not reflect current 

conditions. Also data from Phase II 

facilities may not be representative of 

Phase III facilities. 

E. EPA assumes a linear stock to 

harvest relationship (i.e., a 10 percent 

change in stock would have a 10 percent 

change in landings); this may be low or 

high, depending on the condition of the 

stocks. Region-specific fisheries 

regulations also will affect the validity 

of the linear assumption. 

F. EPA assumes that NOAA Fisheries 

landings data are accurate and 

complete. However, in some cases 

prices and/or quantities may be reported 

incorrectly. 

G. EPA currently estimates that the 

increase in producer surplus as a result 

of the rule will be between 0 percent 

and 40 percent of the estimated change 

in gross revenues. The research used to 

develop this range is not region-specific; 

thus the true value may fall outside this 

range for some regions and species. 

5. Non-Use Benefits 

To assess public policy significance or 

importance of the ecological gains from 

the proposed regulation for Phase III 

facilities, EPA developed the relevant 

information and considered non-use 

benefits of the proposed options 

qualitatively. This assessment is 

discussed below. 

a. Qualitative Assessment 

EPA is able to assign direct use value 

to only a very small fraction of the fish 

lost to impingement and entrainment. 

As shown in Exhibit IX–11, fish with a 

direct use value, which include only 

those fish that are harvested, account for 

only 3.3 percent of the total age-1 

equivalent impingement and 

entrainment loss. Unharvested fish (i.e., 

forage fish and the unlanded portion of 

the stock of harvested species), which 

have no direct use value, represent 96.7 

percent of the total loss. A portion of the 

total benefits of these unharvested 

commercial, recreational, and forage 

species, can be derived indirectly from 

the estimated use values of the 

harvested animals. As noted in section 

IX.D.1, society may value both landed 

and unlanded fish for reasons unrelated 

to their use value. Such non-use values 

include the value that people may hold 

simply for knowing these fish exist. EPA 

believes it is important to consider such 

values, at least qualitatively, 

particularly since such a large 

percentage of impinged and entrained 

organisms have no direct use value.

EXHIBIT IX–11.—NUMBER AND PERCENTAGE OF BASELINE IMPINGEMENT AND ENTRAINMENT LOSSES BY SPECIES

CATEGORY

Region 

Age-1 adult equivalents

(millions) 

All species Forage

species 

Commercial 

and recreational 

species 

Harvested 

commercial 

and recreational 

species 

I&E of harvested species as percentage of 

total I&E 

California .................................................................................................. 1.31 0.666 0.642 0.0594 4.54 

North Atlantic ........................................................................................... 2.34 1.77 0.572 0.0542 2.32 

Mid-Atlantic .............................................................................................. 23.2 14.8 8.47 1.46 6.29 

South Atlantic ........................................................................................... 1.52 0.78 0.74 .011 7.41 

Gulf of Mexico .......................................................................................... 12.7 3.71 9.01 1.2 9.43

Great Lakes ............................................................................................. 34.4 32.8 1.54 0.543 1.58 

Inland ....................................................................................................... 44.2 35.6 8.6 0.511 1.15 

National total a ................................................................................... 120 90.2 29.6 3.94 3.29 

aThe national total includes baseline impingement and entrainment losses at four sample-weighted potentially regulated facilities in the South 

Atlantic region. 

Changes in cooling water intake 

system design or operations resulting 

from the proposed section 316(b) 

regulations for Phase III facilities are 

expected to reduce impingement and 

entrainment losses of fish, shellfish, and 

other aquatic organisms and, as a result, 

are expected to increase the numbers of 

individuals present and benefit local 

and regional fishery populations. 

Depending on the nature and magnitude 

of the reduced losses and of conditions 

at a given site, this may ultimately 

contribute to the enhanced 

environmental functioning of affected 

waterbodies (rivers, lakes, estuaries, and 

oceans) and associated ecosystems. EPA 

does not have the data to determine 

whether reducing impingement and 

entrainment losses at Phase III facilities 

will have significant ecological benefits. 

However, the discussion that follows 

describes benefits that may result from 

reducing impingement and entrainment 

losses generally. 

EPA believes that reducing fish 

mortality from impingement and 

68522 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

entrainment would contribute to the 

health and sustainability of the affected 

fish populations by reducing the overall 

level of mortality for those populations. 

Fish populations suffer from numerous 

sources of mortality; some are natural 

and others are anthropogenic. Natural 

sources include weather, predation by 

other fish, and the availability of food. 

Human impacts that affect fish 

populations include fishing, pollution, 

habitat changes, and impingement and 

entrainment losses at cooling water 

intake structures. Fish populations 

decline when they are unable to 

sufficiently compensate for their overall 

level of mortality. Lowering the overall 

mortality level increases the probability 

that a population will be able to 

compensate for mortality at a level 

sufficient to maintain the long-term 

health of the population.

In addition to their importance in 

providing food and other goods of direct 

use to humans, the organisms lost to 

impingement and entrainment may be 

critical to the continued functioning of 

the ecosystems of which they are a part 

depending on the magnitude of the 

actual impingement and mortality losses 

attributable to Phase III facilities. The 

discussion that follows describes the 

kinds of impacts that EPA believes may 

be due to impingement mortality and 

entrainment losses generally, not 

necessarily those at Phase III facilities. 

Fish are essential for energy transfer in 

aquatic food webs, regulation of food 

web structure, nutrient cycling, 

maintenance of sediment processes, 

redistribution of bottom substrates, the 

regulation of carbon fluxes from water 

to the atmosphere, and the maintenance 

of aquatic biodiversity (Peterson and 

Lubchenco, 1997; Postel and Carpenter, 

1997; Holmlund and Hammer, 1999; 

Wilson and Carpenter, 1999). Examples 

of impacts on ecological conditions, 

functions and services that may result 

from impingement and entrainment 

include: (1) Decreased numbers of 

ecological keystone, rare, sensitive, or 

threatened and endangered species; (2) 

decreased numbers of popular 

commercial and recreational fish 

species that are not fished, perhaps 

because the fishery is closed; (3) 

increased numbers of exotic or 

disruptive species that compete well in 

the absence of species lost to 

impingement and entrainment 

(impingement and entrainment may also 

help remove some exotic or disruptive 

organisms); (4) disruption of ecological 

niches and ecological strategies used by 

aquatic species; (5) disruption of energy 

transfer through the food web; (6) 

decreased local biodiversity; (7) 

disruption of predator-prey 

relationships; (8) disruption of age class 

structures of species; (9) disruption of 

natural succession processes. Many of 

these functions and services can only be 

maintained by the continued presence 

of all life stages of fish and other aquatic 

species in their natural habitats. While 

some ecological services of aquatic 

species have been studied, other 

ecosystems services, relationships, and 

interrelationships are unknown or 

poorly understood. To the extent that 

the latter are not captured in the 

benefits analyses, total benefits may be 

underestimated. 

Scientific and public interest in 

protecting ecosystem services is 

increasing with the recognition that 

these services are vulnerable to a wide 

range of human activities and are 

difficult, if not impossible, to replace 

with human technologies (Meffe, 1992; 

DCN 7–5250). Reducing impingement 

and entrainment losses could contribute 

to restoring (or preserving) the 

biological integrity of the ecosystems of 

substantial national importance. 

In the 1987 amendments to the CWA, 

Congress established the National 

Estuary Program because the ‘‘Nation’s 

estuaries are of great importance to fish 

and wildlife resources and recreation 

and economic opportunity * * * [, and] 

maintaining the health and ecological 

integrity of these estuaries is in the 

national interest (Water Quality Act of 

1987 (Pub. L. 100–4), § 317(a)(1)(A) and 

(B) adding § 320 to the CWA, 33 US.C. 

1330). So far, there are 28 estuaries 

designated under the National Estuary 

Program (NEP). In addition, the largest 

estuary in the United States, Chesapeake 

Bay, is protected under its own 

Federally mandated program, separate 

but related to NEP. Of the 15 estuaries 

from which the potentially regulated 

Phase III facilities withdraw cooling 

water, 12 are nationally significant 

estuaries designated under NEP or the 

Chesapeake Bay Program. 

Substantial Federal and State 

resources have been directed to NEP to 

enhance conservation and knowledge 

about the estuaries designated under 

this program. Since 1998, more than $95 

million dollars has been devoted to NEP 

to benefit the health of the nationally 

significant estuaries (NEP, 2004, DCN 7–

5125). 

Reducing impingement and 

entrainment at potentially regulated 

Phase III facilities may also benefit 

freshwater ecosystems of national 

significance, including the Great Lakes 

Basin, Mississippi River, and Columbia 

River. These waterbodies are subject to 

large-scale ecosystem restoration efforts 

that are good indicators of great public 

interest in restoring the ecological 

health of these ecosystems (U.S. Fish 

and Wildlife Service, 2004, DCN 7–

5126; U.S. Department of the Interior, 

2004, DCN 7–5127; Northeast Midwest 

Institute, 2004, DCN 7–5128; The Upper 

Mississippi River Basin Association, 

2004, DCN 7–5129). The ecosystem 

restoration efforts focus on many issues, 

including coastal habitat restoration, 

protection of fish species, conservation 

of migratory birds and endangered 

species. For example, between 1992 and 

2001, more than $17 million was 

devoted to projects to restore and 

conserve the Great Lakes ecosystem, and 

$102 million was spent on improving 

the Mississippi River ecosystem (U.S. 

EPA, 2004, DCN 7–5130; and Brescia, 

2002, DCN 7–5131). Reducing 

impingement and entrainment of 

aquatic organisms may improve the 

quality of aquatic habitat and contribute 

to improvement of the biological 

integrity and health of these ecosystems. 

Finally, reducing impingement and 

entrainment in waterbodies that do not 

have national significance may 

contribute to restoration or protection of 

ecosystems of regional or local 

importance. 

Today’s proposed rule may also help 

preserve threatened and endangered 

species by reducing the number of 

individuals lost to impingement and 

entrainment. Threatened and 

endangered (T&E) and other special 

status species directly affected by 

impingement and entrainment include, 

pallid sturgeon, delta smelt, Sacramento 

splittail, and longfin smelt. Threatened 

and endangered species can also suffer 

indirect impacts if impingement and 

entrainment at cooling water intake 

structures disrupts their food source or 

their critical habitat. The loss of 

individuals of listed species from 

impingement and entrainment is 

particularly important because, by 

definition, these species are already rare 

and at risk of irreversible decline 

because of other stressors. EPA explored 

several methods for valuing reductions 

in threatened and endangered species 

losses. However, EPA has not included 

quantitative measures of non-use values 

associated with protection of threatened 

and endangered species in the proposed 

section 316(b) rule for Phase III facilities 

benefit analysis due to current 

uncertainty about the extent of Phase III 

facilities’ impact on threatened and 

endangered species at the national level 

and EPA’s inability to monetize such 

benefits given the available economic 

valuation literature. Details about 

possible non-use benefits valuation 

approaches are presented in Chapter A9 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68523

of the 316(b) Regional Analysis 

Document (DCN 7–0003). 

6. National Benefits 

Quantifying and monetizing reduction 

in impingement and entrainment losses 

due to today’s proposed rule is 

challenging, and the preceding sections 

discuss specific limitations and 

uncertainties associated with estimation 

of commercial, recreational, and nonuse benefit categories. National benefit 

estimates are subject to uncertainties 

inherent in valuation approaches used 

for assessing the three benefits 

categories. The combined effect of these 

uncertainties is of unknown magnitude 

or direction (i.e., the estimates may over 

or under state the anticipated nationallevel benefits); however, EPA has no 

data to indicate that the results for each 

benefit category are atypical or 

unreasonable. Since the Agency was 

unable to monetize non-use benefits, the 

estimates of total benefits reflect use 

values only. 

Exhibit IX–13 presents EPA’s 

estimates of the total monetized benefits 

from impingement and entrainment 

reduction under the ‘‘50 MGD for All 

Waterbodies’’ option. The annualized 

use benefits from impingement and 

entrainment reduction post regulation 

are $1.90 million per year (2003$), with 

lower and upper bounds of $0.98 

million and $3.84 million, discounted at 

three percent. Discounted at seven 

percent, annualized use benefits are 

$1.50 million per year, with lower and 

upper bounds of $0.77 million and 

$3.02 million.

EXHIBIT IX–13.—SUMMARY OF MONETIZED SOCIAL BENEFITS ‘‘50 MGD FOR ALL WATERBODIES’’ OPTION

[Thousands; 2003 $] a

Region 

Annualized 

commercial 

fishing

benefits 

Annualized recreational fishing benefits Total annualized value of monetizable 

impingement and entrainment

reductions b

Low Mean High 

Low Mean High 

Evaluated at a 3 percent discount rate

California .................................................. $0–$5 $10 $24 $57 $16 $29 $62 

North Atlantic ........................................... 0–3 29 63 138 32 66 141 

Mid-Atlantic .............................................. 0–25 235 497 1,057 260 522 1,082 

Gulf of Mexico .......................................... 0–78 249 558 1,254 327 636 1,332 

Great Lakes ............................................. 0–20 157 316 621 178 337 641 

Inland c ..................................................... 0 162 306 577 162 306 577 

National total ..................................... 0–132 843 1,765 3,704 975 1,897 3,836 

Evaluated at a 7 percent discount rate

California .................................................. 0–4 9 20 47 13 24 51 

North Atlantic ........................................... 0–2 22 49 107 25 51 109 

Mid-Atlantic .............................................. 0–19 181 382 811 200 401 830 

Gulf of Mexico .......................................... 0–62 198 444 998 260 506 1,061 

Great Lakes ............................................. 0–16 122 246 483 138 262 499 

Inland c ..................................................... 0 133 251 473 133 251 473 

National total ..................................... 0–104 665 1,391 2,919 769 1,495 3,023 

aAll benefits presented in this exhibit are annualized. These annualized benefits represent the value of all benefits generated over the time 

frame of the analysis, discounted to 2007, and then annualized over a thirty year period. For a more detailed discussion of the discounting methodology, refer to section IX.D.2 of this preamble. bThe total monetizable value of impingement and entrainment reductions includes use benefits only. EPA evaluated non-use benefits only 

qualitatively. A range of recreational fishing benefits is provided, based on the Krinsky and Robb technique to estimate the 95th and 5th percentile limits on the marginal value per fish predicted by the meta-analysis. Commercial fishing benefits are computed based on a range from 0 

percent to 40 percent of the change in gross revenue, as explained in the text. To calculate the total monetizable value columns (low, mean, and 

high), the high end value for commercial fishing benefits is added to the low, medium and high values for recreational fishing benefits respectively. cThere are no commercial fishing benefits in the Inland region. 

Exhibit IX–14 presents EPA’s 

estimates of the total monetized benefits 

from impingement and entrainment 

reduction under the ‘‘200 MGD for All 

Waterholes’’ option. The annualized use 

benefits from impingement and 

entrainment reduction post regulation 

are $1.26 million per year (2003$), with 

lower and upper bounds of $0.65 

million and $2.54 million, discounted at 

three percent. Discounted at seven 

percent, annualized use benefits are 

$0.98 million per year, with lower and 

upper bounds of $0.51 million and 

$1.98 million.

68524 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

EXHIBIT IX–14.—SUMMARY OF MONETIZED SOCIAL BENEFITS ‘‘200 MGD FOR ALL WATERBODIES’’ OPTION

[Thousands; 2003 $] a

Region 

Annualized 

commercial 

fishing

benefits 

Annualized recreational fishing benefits Total annualized value of monetizable 

impingement and entrainment

reductions b

Low Mean High 

Low Mean High 

Evaluated at a 3 percent discount rate

California .................................................. $0 $0 $0 $0 $0 $0 $0

North Atlantic ........................................... 0–1 6 13 28 7 14 29 

Mid-Atlantic .............................................. 0–22 208 440 934 230 462 956 

Gulf of Mexico .......................................... 0–43 136 305 685 179 347 728 

Great Lakes ............................................. 0–14 108 216 425 122 230 439 

Inland c ..................................................... 0 110 207 390 110 207 390 

National total ..................................... 0–79 567 1,181 2,463 647 1,260 2,542 

Evaluated at a 7 percent discount rate

California .................................................. 0 0 0 0 0 0 0 

North Atlantic ........................................... 0 4 10 21 5 10 21 

Mid-Atlantic .............................................. 0–17 158 334 709 175 350 726 

Gulf of Mexico .......................................... 0–34 108 243 545 142 277 579 

Great Lakes ............................................. 0–11 83 166 326 93 177 337 

Inland c ..................................................... 0 90 170 321 90 170 321 

National total ..................................... 62 443 922 1,922 505 984 1,984 

aAll benefits presented in this exhibit are annualized. These annualized benefits represent the value of all benefits generated over the time 

frame of the analysis, discounted to 2007, and then annualized over a thirty year period. For a more detailed discussion of the discounting methodology, refer to section IX.D.2 of this preamble. bThe estimate of the total monetizable value of impingement and entrainment reductions includes use benefits only. 

cThere are no commercial fishing benefits in the Inland region. 

Exhibit IX–15 presents EPA’s 

estimates of the total monetized benefits 

from impingement and entrainment 

reduction under the ‘‘100 MGD for 

Certain Waterbodies’’ option. The 

annualized use benefits from 

impingement and entrainment 

reduction post regulation are $1.41 

million per year (2003$), with lower and 

upper bounds of $0.72 million and 

$2.90 million, discounted at three 

percent. Discounted at seven percent, 

annualized use benefits are $1.10 

million per year, with lower and upper 

bounds of $0.56 million and $2.26 

million.

EXHIBIT IX–15.—SUMMARY OF MONETIZED SOCIAL BENEFITS ‘‘100 MGD FOR CERTAIN WATERBODIES’’ OPTION

[Thousands; 2003 $] a

Region 

Annualized 

commercial 

fishing

benefits 

Annualized recreational fishing benefits Total annualized value of monetizable 

impingement and entrainment

reductions b

Low Mean High 

Low Mean High 

Evaluated at a 3 percent discount rate

California .................................................. $0 $0 $0 $0 $0 $0 $0 

North Atlantic ........................................... 0–2 24 52 113 26 54 115 

Mid-Atlantic .............................................. 0–22 208 440 934 230 462 956 

Gulf of Mexico .......................................... 0–78 249 558 1,254 327 636 1,332 

Great Lakes ............................................. 0–16 121 243 478 137 259 494 

Inland c ..................................................... 0 0 0 0 0 0 0 

National total ..................................... 0–118 602 1,292 2,779 720 1,411 2,897 

Evaluated at a 7 percent discount rate

California .................................................. 0 0 0 0 0 0 0 

North Atlantic ........................................... 0–2 19 40 88 20 42 90 

Mid-Atlantic .............................................. 0–17 158 334 709 175 350 726 

Gulf of Mexico .......................................... 0–62 198 444 998 260 506 1,061 

Great Lakes ............................................. 0–12 93 188 368 105 200 381 

Inland c ..................................................... 0 0 0 0 0 0 0 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68525

56This section only includes benefits and costs 

for existing facilities because EPA was unable to 

assess benefits of reducing impringement mortality and entrainment at new offshore oil and gas 

facilities.

EXHIBIT IX–15.—SUMMARY OF MONETIZED SOCIAL BENEFITS ‘‘100 MGD FOR CERTAIN WATERBODIES’’ OPTION—

Continued

[Thousands; 2003 $] a

Region 

Annualized 

commercial 

fishing

benefits 

Annualized recreational fishing benefits Total annualized value of monetizable 

impingement and entrainment

reductions b

Low Mean High 

Low Mean High 

National total ..................................... 0–93 468 1,006 2,164 561 1,099 2,257 

aAll benefits presented in this exhibit are annualized. These annualized benefits represent the value of all benefits generated over the time 

frame of the analysis, discounted to 2007, and then annualized over a thirty year period. For a more detailed discussion of the discounting methodology, refer to section IX.D.2 of this preamble. bThe estimate of the total monetizable value of impingement and entrainment reductions includes use benefits only. 

cThere are no commercial fishing benefits in the Inland region. 

EPA considered a wide range of 

policy options in developing the 

proposed section 316(b) regulation for 

the Phase III facilities. The Regional 

Analysis Document provides EPA’s 

complete benefit assessment for the 

alternative policy options considered in 

this rulemaking.

X. Comparison of Benefits and Costs 

This section presents two measures 

that compare the benefits and costs of 

the regulatory options: (1) A benefit-cost 

analysis, and (2) a break-even analysis 

of the minimum non-use benefits 

required for total annualized benefits to 

equal total annualized costs, on a per 

household basis. Each measure is 

presented by study region. 

A. Benefit-Cost Analysis 

The benefit-cost analysis for each of 

the co-proposed regulatory options 

compares total annualized use benefits 

to total annualized pre-tax costs (social 

costs) at existing facilities that remain 

open in the baseline.56 Benefits and 

costs were discounted using both a 3 

percent and 7 percent discount rate. The 

cost estimates include costs of 

compliance to facilities subject to the 

proposed rule as well as administrative 

costs incurred by State and local 

governments and by the Federal 

government. The benefits estimates 

include monetized benefits to 

commercial and recreational fishing. 

The total monetizable benefits include 

only use benefits. The non-use benefits 

were evaluated qualitatively. Thus, the 

benefit-cost analysis compares a 

generally complete measure of social 

costs with an incomplete measure of 

social benefits and should be 

interpreted bearing in mind this 

inconsistency.

1. Benefit-Cost Analysis Results 

Exhibit X–1 presents a summary of 

total annualized use benefits, total 

annualized costs, and net benefits for 

the ‘‘50 MGD for All Waterbodies’’

option. Under this option, 136 facilities 

(excluding baseline closures) are subject 

to the regulation. Of those facilities, it 

is assumed that 103 are required to 

install technologies to reduce 

impingement mortality and 

entrainment, and 32 will incur 

permitting costs only. The exhibit 

shows that the use benefits of the 50 

MGD option are not projected to exceed 

the costs in any of the study regions. In 

the California region, costs exceed use 

benefits by $0.8 million or $0.9 million 

when discounted at 3 percent and 7 

percent respectively. In the Inland 

region, costs are $19.4 million or $20.4 

million greater than the use benefits. At 

the national level, EPA projects the 

costs of this option to exceed its use 

benefits by $45.4 million per year, 

discounted at 3 percent, or by $48.6 

million per year, discounted at 7 

percent.

EXHIBIT X–1.—SUMMARY OF SOCIAL BENEFITS AND COSTS ‘‘50 MGD FOR ALL WATERBODIES’’ OPTION

[Millions; $ 2003] 

Study region 

Number 

of facilities subject to 

option 

Number 

of facilities

installing 

technology 

Total annualized use value of 

I&E

reductions a Total 

annualized 

costs b

Net benefits c

Low Mean High 

Low Mean High 

Evaluated at a 3% discount rate

California ..................................................... 1 1 $0.02 $0.03 $0.06 $0.8 ¥$0.8 ¥$0.8 ¥$0.8

North Atlantic .............................................. 5 4 0.03 0.07 0.14 4.6 ¥4.5 ¥4.5 ¥4.5 

Mid-Atlantic ................................................. 3 3 0.26 0.52 1.08 2.6 ¥2.3 ¥2.0 ¥1.5 

Gulf of Mexico ............................................. 7 7 0.33 0.64 1.33 9.1 ¥8.7 ¥8.4 ¥7.7 

Great Lakes ................................................ 23 19 0.18 0.34 0.64 10.1 ¥9.9 ¥9.7 ¥9.4 

Inland .......................................................... 97 69 0.16 0.31 0.58 19.7 ¥19.5 ¥19.4 ¥19.1 

National total ........................................ 136 103 0.97 1.90 3.84 47.3 ¥46.4 ¥45.4 ¥43.5 

Evaluated at a 7% discount rate

California ..................................................... 1 1 0.01 0.02 0.05 1.0 ¥1.0 ¥0.9 ¥0.9 

North Atlantic .............................................. 5 4 0.02 0.05 0.11 5.0 ¥5.0 ¥5.0 ¥4.9 

Mid-Atlantic ................................................. 3 3 0.20 0.40 0.83 2.4 ¥2.2 ¥2.0 ¥1.6 

68526 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

EXHIBIT X–1.—SUMMARY OF SOCIAL BENEFITS AND COSTS ‘‘50 MGD FOR ALL WATERBODIES’’ OPTION—Continued

[Millions; $ 2003] 

Study region 

Number 

of facilities subject to 

option 

Number 

of facilities

installing 

technology 

Total annualized use value of 

I&E

reductions a Total 

annualized 

costs b

Net benefits c

Low Mean High 

Low Mean High 

Gulf of Mexico ............................................. 7 7 0.26 0.51 1.06 10.2 ¥9.9 ¥9.7 ¥9.1 

Great Lakes ................................................ 23 19 0.14 0.26 0.50 10.2 ¥10.1 ¥9.9 ¥9.7 

Inland .......................................................... 97 69 0.13 0.25 0.47 20.6 ¥20.5 ¥20.4 ¥20.2 

National total ........................................ 136 103 0.77 1.50 3.02 50.1 ¥49.3 ¥48.6 ¥47.1 

aThe total monetizable value of I&E reductions includes use benefits only. EPA evaluated non-use benefits only qualitatively. The ranges (low, 

medium, and high) for annualized use value is computed by adding the high end value for commercial fishing benefits (based on assumed producer surplus of 40% of gross revenue) to the low, mean, and high values for recreational fishing benefits respectively (see Section IX). bTotal costs are based on pre-tax facility costs. National total costs also include State, local, and Federal administrative costs of $0.6 million 

that cannot be attributed to individual study regions. c Net benefits are computed by subtracting total annualized costs from total annual use values. The net benefits presented here are based on 

the comparison of a generally complete measure of social costs with an incomplete measure of social benefits, and should be interpreted with 

caution. 

Exhibit X–2 presents a summary of 

total annualized benefits, total 

annualized costs, and net benefits for 

the ‘‘200 MGD for All Waterbodies’’

option. Under this option, 25 facilities 

(excluding baseline closures) are subject 

to the regulation. Of those facilities, it 

is assumed that 22 are required to install 

technologies to reduce impingement 

mortality and entrainment. The exhibit 

shows that the use benefits of the 200 

MGD option are not projected to exceed 

the costs in any of the study regions. In 

the North Atlantic region, costs exceed 

use benefits by $0.5 million, evaluated 

at both the 3 percent and 7 percent 

discount rates. In the Inland region, 

costs are $12.1 million or $13.5 million 

greater than the use benefits. At the 

national level, EPA projects the costs of 

this option to exceed its use benefits by 

$21.5 million per year, discounted at 3 

percent, or by $23.1 million per year, 

discounted at 7 percent.

EXHIBIT X–2.—SUMMARY OF SOCIAL BENEFITS AND COSTS ‘‘200 MGD FOR ALL WATERBODIES’’ OPTION

[Millions; $2003] 

Study region 

Number 

of facilities subject to option 

Number 

of facilities installing 

technology 

Total annualized use value of I&E 

reductions a

Total 

annualized 

costs b

Net benefits c

Low Mean High Low Mean High 

Evaluated at a 3% discount rate

California ..................................... 0 0 $0.00 $0.00 $0.00 $0.0 $0.0 $0.0 $0.0 

North Atlantic .............................. 1 1 0.01 0.01 0.03 0.5 ¥0.5 ¥0.5 ¥0.5 

Mid-Atlantic ................................. 2 2 0.23 0.46 0.96 2.0 ¥1.7 ¥1.5 ¥1.0 

Gulf of Mexico ............................ 2 2 0.18 0.35 0.73 3.8 ¥3.6 ¥3.5 ¥3.1 

Great Lakes ................................ 5 5 0.12 0.23 0.44 4.1 ¥3.9 ¥3.8 ¥3.6 

Inland .......................................... 14 12 0.11 0.21 0.39 12.3 ¥12.2 ¥12.1 ¥11.9 

National total ....................... 25 22 0.65 1.26 2.54 22.8 ¥22.1 ¥21.5 ¥20.2 

Evaluated at a 7% discount rate

California ..................................... 0 0 $0.00 $0.00 $0.00 $0.0 $0.0 $0.0 $0.0 

North Atlantic .............................. 1 1 0.00 0.01 0.02 0.5 ¥0.5 ¥0.5 ¥0.4 

Mid-Atlantic ................................. 2 2 0.17 0.35 0.73 1.8 ¥1.6 ¥1.4 ¥1.1 

Gulf of Mexico ............................ 2 2 0.14 0.28 0.58 4.4 ¥4.2 ¥4.1 ¥3.8 

Great Lakes ................................ 5 5 0.09 0.18 0.34 3.7 ¥3.6 ¥3.5 ¥3.3 

Inland .......................................... 14 12 0.09 0.17 0.32 13.7 ¥13.6 ¥13.5 ¥13.4 

National total ....................... 25 22 0.51 0.98 1.98 24.1 ¥23.6 ¥23.1 ¥22.1 

aThe total monetizable value of I&E reductions includes use benefits only. EPA did not estimate non-use benefits quantitatively. The low and 

high use values reflect the range of recreational fishing values presented in Section 9 of the preamble. They were calculated using the Krinsky 

and Robb technique to estimate the 95th and 5th percentile limits on the marginal value per fish predicted by the meta-analysis. bTotal costs are based on pre-tax facility costs. National total costs also include State, local, and Federal administrative costs of $0.1 million 

that cannot be attributed to individual study regions. cThe net benefits presented here are based on the comparison of a generally complete measure of social costs with an incomplete measure 

of social benefits, and should be interpreted with caution. 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68527

Exhibit X–3 presents a summary of 

total annualized benefits, total 

annualized costs, and net benefits for 

the regulatory option with a design 

intake flow of 100 MGD or more for 

facilities withdrawing from oceans, 

estuaries, and tidal rivers, or the Great 

Lakes (‘‘100 MGD for Certain 

Waterbodies’’). Under this option, 19 

facilities (excluding baseline closures) 

are subject to the regulation. Of those 

facilities, it is assumed that 18 are 

required to install technologies to 

reduce impingement mortality and 

entrainment, and one will incur 

permitting costs only. The exhibit 

shows that the use benefits of the 100 

MGD for certain waterbodies option are 

not projected to exceed the costs in any 

of the study regions. In the Mid-Atlantic 

region, costs exceed use benefits by $1.5 

million or $1.4 million, evaluated at 3 

percent and 7 percent discount rates. In 

the Gulf of Mexico region, costs are $8.4 

million or $9.7 million greater than the 

use benefits. At the national level, EPA 

projects the costs of this option to 

exceed its use benefits by $16.2 million 

per year, discounted at 3 percent, or by 

$17.2 million per year, discounted at 7 

percent.

EXHIBIT X–3.—SUMMARY OF SOCIAL BENEFITS AND COSTS 100 MGD FOR CERTAIN WATERBODIES’’ OPTION

[millions; $2003] 

Study region 

Number 

of facilities subject to option 

Number 

of facilities installing 

technology 

Total annualized use value of I&E 

reductions a

Total annualize d

Costs b

Net benefits c

Low Mean High Low Mean High 

Evaluated at a 3% discount rate

California ...................................... 0 0 $0.00 $0.00 $0.00 $0.0 $0.0 $0.0 $0.0 

North Atlantic ............................... 3 3 0.03 0.05 0.12 2.0 ¥2.0 ¥1.9 ¥1.9 

Mid Atlantic .................................. 2 2 0.23 0.46 0.96 2.0 ¥1.7 ¥1.5 ¥1.0 

Gulf of Mexico .............................. 7 7 0.33 0.64 1.33 9.1 ¥8.7 ¥8.4 ¥7.7 

Great Lakes ................................. 8 6 0.14 0.26 0.49 4.5 ¥4.3 ¥4.2 ¥4.0 

Inland ........................................... 0 0 0.00 0.00 0.00 0.0 0.0 0.0 0.0

National total ......................... 19 18 0.72 1.41 2.90 17.6 ¥16.9 ¥16.2 ¥14.7

Evaluated at a 7% discount rate

California ...................................... 0 0 $0.00 $0.00 $0.00 $0.0 $0.0 $0.0 $0.0 

North Atlantic ............................... 3 3 0.02 0.04 0.09 2.0 ¥2.0 ¥2.0 ¥1.9 

Mid Atlantic .................................. 2 2 0.17 0.35 0.73 1.8 ¥1.6 ¥1.4 ¥1.1 

Gulf of Mexico .............................. 7 7 0.26 0.51 1.06 10.2 ¥9.9 ¥9.7 ¥9.1 

Great Lakes ................................. 8 6 0.11 0.20 0.38 4.1 ¥4.0 ¥3.9 ¥3.7 

Inland ........................................... 0 0 0.00 0.00 0.00 0.0 0.0 0.0 0.0

National total ......................... 19 18 0.56 1.10 2.26 18.3 ¥17.7 ¥17.2 ¥16.0 

aThe total monetizable value of I&E reductions includes use benefits only. EPA did not estimate non-use benefits quantitatively. The low and 

high use values reflect the range of recreational fishing values presented in Section 9 of the preamble. They were calculated using the Krinsky 

and Robb technique to estimate the 95th and 5th percentile limits on the marginal value per fish predicted by the meta-analysis. bTotal costs are based on pre-tax facility costs. National total costs also include State, local, and Federal administrative costs of $0.2 million 

that cannot be attributed to individual study regions. cThe net benefits presented here are based on the comparison of a generally complete measure of social costs with an incomplete measure 

of social benefits, and should be interpreted with caution. 

B. Break-even Analysis 

Estimating non-use values is an 

extremely challenging and uncertain 

exercise, particularly when, due to time 

and resource constraints, primary 

research using stated preference 

methods was not a feasible option for 

this proposed rule. In Section IX.D.5 

above, EPA described possible 

alternative approaches for developing 

non-use benefit estimates based on 

benefits transfer and associated 

methods. Due to the uncertainties of 

providing estimates of the magnitude of 

non-use values associated with the 

regulatory options considered for this 

proposal, this section provides an 

alternative approach for evaluating the 

significance of non-use values. The 

approach used here applies a ‘‘breakeven’’ analysis to identify what non-use 

values would have to be in order for the 

options to have monetized benefits that 

are equal to costs. 

The break-even approach uses EPA’s 

estimated commercial and recreational 

use benefits for the regulatory options 

and subtracts them from the estimated 

annual compliance costs incurred by 

existing facilities subject to the 

regulatory options. The resulting ‘‘net 

cost’’ enables one to work backwards to 

estimate what non-use values would 

need to be in order for total annual 

benefits to equal annualized costs. EPA 

computed the per household 

willingness-to-pay for all three options 

proposed today and found that the nonuse values necessary to equate total 

annual benefits with total annual social 

cost ranged from $1.43 per household, 

for the ‘‘100 MGD for Certain 

Waterbodies’’ option discounted at 3 

percent, to $2.13 per household for the 

‘‘50 MDG for All Water bodies’’ option 

discounted at 7 percent. EPA also 

calculated the break-even non-use value 

per (age-1 equivalent) fish saved. The 

per fish value necessary to have the total 

annual costs and benefits of the 

proposed options equate range from 

$0.54 for the ‘‘100 MGD for Certain 

Waterbodies’’ option, discounted at 3 

percent, to $0.98 for the ‘‘50 MDG for 

All Water bodies’’ option, discounted at 

7 percent. For a detailed discussion of 

the estimation and results of both the 

per household and per fish break-even 

values see the Regional Analysis 

Document.

68528 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

XI. Statutory and Executive Order 

Reviews 

A. E.O. 12866: Regulatory Planning and 

Review 

Under Executive Order 12866 (58 FR 

51735, October 4, 1993), the Agency 

must determine whether the regulatory 

action is ‘‘significant’’ and therefore 

subject to Office of Management and 

Budget (OMB) review and the 

requirements of the Executive Order. 

The order defines a ‘‘significant 

regulatory action’’ as one that is likely 

to result in a rule that may: 

• Have an annual effect on the 

economy of $100 million or more or 

adversely affect in a material way the 

economy, a sector of the economy, 

productivity, competition, jobs, the 

environment, public health or safety, or 

State, local, or Tribal governments or 

communities; 

• Create a serious inconsistency or 

otherwise interfere with an action taken 

or planned by another agency; 

• Materially alter the budgetary 

impact of entitlements, grants, user fees, 

or loan programs or the rights and 

obligations of recipients thereof; or 

• Raise novel legal or policy issues 

arising out of legal mandates, the 

President’s priorities, or the principles 

set forth in the Executive Order. 

Pursuant to the terms of Executive 

Order 12866, it has been determined 

that this proposed rule is a ‘‘significant 

regulatory action.’’ As such, this action 

was submitted to OMB for review. 

Changes made in response to OMB 

suggestions or recommendations will be 

documented in the public record. 

B. Paperwork Reduction Act 

The information collection 

requirements in this proposed rule have 

been submitted for approval to the 

Office of Management and Budget 

(OMB) under the Paperwork Reduction 

Act, 44 U.S.C. 3501 et seq. The 

Information Collection Request (ICR) 

document prepared by EPA has been 

assigned EPA ICR number 2169.01. 

The information collected under 

today’s proposed rule would assist EPA 

in regulating environmental impacts, 

namely impingement mortality and 

entrainment, at cooling water intake 

structures at Phase III facilities and new 

offshore oil and gas extraction facilities. 

This information would be used by 

these parties to prepare comprehensive 

demonstration studies, monitor 

impingement mortality and 

entrainment, verify compliance, and 

prepare annual/biennial reports as 

required under today’s proposal. The 

information collected would be 

reviewed by EPA and State Directors to 

ensure that appropriate National 

Pollutant Discharge Elimination System 

(NPDES) permit conditions regulating 

cooling water intake structures would 

be developed. Compliance with the 

applicable information collection 

requirements imposed under this 

proposed rule is mandatory (see

§§ 122.21(r), 125.136, 125.137, 125.138, 

125.104, 125.105, 125.106, 125.107, 

125.108). 

EPA does not consider the specific 

data that would be collected under this 

proposed rule to be confidential 

business information. However, if a 

respondent does consider this 

information to be confidential, the 

respondent may request that such 

information be treated as confidential. 

All confidential data will be handled in 

accordance with 40 CFR 122.7, 40 CFR 

Part 2, and EPA’s Security Manual Part 

III, Chapter 9, dated August 9, 1976. 

Today’s proposed rule would modify 

regulations at § 122.21 to require 

existing Phase III facilities and new 

offshore oil and gas extraction facilities 

to prepare and submit some of the same 

information required for Phase I and 

Phase II facilities. The proposed 

application requirements would require 

owners or operators of Phase III existing 

facilities to submit two general 

categories of information when they 

apply for a reissued NPDES permit. The 

general categories of information would 

include (1) permit application 

information, and (2) verification 

monitoring data. A detailed list of 

required data items is provided below. 

As discussed in section II of the 

preamble, EPA is proposing three 

regulatory options for existing facilities 

in today’s proposed rule based on 

design intake flow including: (1) A 50 

MGD option for facilities withdrawing 

water from all waterbody types; (2) a 

200 MGD option for facilities 

withdrawing water from all waterbody 

types; and (3) a 100 MGD option for 

facilities which withdraw water 

specifically from an ocean, estuary, tidal 

river, or one of the Great Lakes. Under 

the co-proposed 50 MGD thresholdbased option, the total average annual 

burden, during the first three years after 

promulgation of the rule, of the 

information collection requirements 

associated with today’s proposed rule is 

estimated at 215,885 hours. The 

corresponding estimates of average 

annual cost other than labor (labor and 

non-labor costs are included in the total 

cost of the proposed rule discussed in 

section VIII of this preamble) is $2.81 

million for 87 facilities (56 existing 

manufacturers and 31 new offshore oil 

and gas facilities) and 45 States and one 

Territory during the first three years 

after promulgation of the rule. Under 

the co-proposed 200 MGD thresholdbased option, the total average annual 

burden, during the first three years after 

promulgation of the rule, of the 

information collection requirements is 

estimated at 62,280 hours. The 

corresponding average annual non-labor 

cost is $1.46 million for 44 facilities (13 

existing manufacturers and 31 new 

offshore oil and gas facilities), and 45 

States and one Territory during the first 

three years after promulgation of the 

rule. Under the co-proposed 100 MGD 

threshold-based option, the total average 

annual burden, during the first three 

years after promulgation of the rule, of 

the information collection requirements 

is estimated at 85,622 hours. The 

corresponding average annual non-labor 

cost is $1.62 million for 42 facilities (11 

existing manufacturers and 31 new 

offshore oil and gas facilities), and 45 

States and one Territory during the first 

three years after promulgation of the 

rule. 

Non-labor costs include activities 

such as capital costs for remote 

monitoring devices, laboratory services, 

photocopying, and the purchase of 

supplies. The burden and costs are for 

the information collection, reporting, 

and recordkeeping requirements for the 

three-year period beginning with the 

assumed effective date of today’s rule. 

Additional information collection 

requirements will occur after this initial 

three-year period as existing facilities 

continue to be issued permit renewals, 

new offshore oil and gas extraction 

facilities are issued permits, and such 

requirements will be counted in a 

subsequent information collection 

request. 

Burden means the total time, effort, or 

financial resources expended by persons 

to generate, maintain, retain, or disclose 

or provide information to or for a 

Federal agency. This includes the time 

needed to review instructions; develop, 

acquire, install, and utilize technology 

and systems for the purposes of 

collecting, validating, and verifying 

information, processing and 

maintaining information, and disclosing 

and providing information; adjust the 

existing ways to comply with any 

previously applicable instructions and 

requirements; train personnel to be able 

to respond to a collection of 

information; search data sources; 

complete and review the collection of 

information; and transmit or otherwise 

disclose the information. 

Studies to be submitted by both Phase 

III existing facilities and new offshore 

oil and gas extraction facilities under 

today’s proposed rule are listed below. 

Both Phase III existing facilities and 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68529

new offshore oil and gas fixed platforms 

would be required to collect the general 

information listed below. 

• Source Water Physical Data 

(§ 122.21(r)(2)) (both Phase III existing 

facilities and new offshore oil and gas 

facilities) 

• Cooling Water Intake Structure Data 

(§ 122.21(r)(3)) ((both Phase III existing 

facilities and new offshore oil and gas 

facilities) 

• Cooling Water System Description 

(§ 122.21(r)(5)) (Phase III existing 

facilities only) 

Depending on the compliance 

alternative selected by the individual 

facility, Phase III existing facilities may 

be required to submit the following 

information: 

• Proposal for Information Collection 

(§ 125.104(b)(1)) 

• Source Waterbody Flow 

Information (§ 125.104(b)(2))

• Impingement Mortality and/or 

Entrainment Characterization Study 

(§ 125.104(b)(3)) 

• Technology Compliance and 

Assessment Information 

(§ 125.104(b)(4)) 

• Restoration Plan (§ 125.104(b)(5)) 

• Information to Support Site-specific 

Determination of Best Technology 

Available for Minimizing Adverse 

Environmental Impact (§ 125.104(b)(6)) 

• Verification Monitoring Plan 

(§ 125.104(b)(7)) 

New offshore oil and gas extraction 

facilities would be required to submit 

the following information under Track I: 

• Source Water Baseline Biological 

Characterization Data (§ 122.21(r)(4)) 

(not required for non-fixed facilities) 

• Velocity Information 

(§ 125.136(b)(2)) 

• Source Waterbody Flow 

Information (§ 125.136(b)(3)) (not 

required for non-fixed facilities) 

• Design and Construction 

Technology Plan (§ 125.136(b)(4)) 

In addition to the information 

requirements of the permit renewal 

application, NPDES permits normally 

specify monitoring and reporting 

requirements to be met by the permitted 

entity. Existing facilities that fall within 

the scope of this proposed rule would 

be required to perform biological 

monitoring as required by the Director 

to demonstrate compliance. New 

offshore oil and gas extraction fixed 

facilities would be required to perform 

monitoring as determined by the Track 

I or Track II requirements in § 125.136. 

Additional ambient water quality 

monitoring may also be required of 

facilities depending on the 

specifications of their permits. New 

offshore oil and gas extraction facilities 

would be expected to analyze the results 

from their monitoring efforts and 

provide these results in an annual status 

report to the permitting authority. 

Existing Phase III facilities would be 

required to submit a status report every 

two years that included appropriate 

monitoring data and any other 

information specified by the Director. 

Finally, facilities would be required to 

maintain records of all submitted 

documents, supporting materials, and 

monitoring results for at least three 

years. (Note that the Director may 

require that records be kept for a longer 

period to coincide with the life of the 

NPDES permit.) 

All impacted facilities would carry 

out the specific activities necessary to 

fulfill the general information collection 

requirements. The estimated burden 

includes developing a water balance 

diagram that can be used to identify the 

proportion of intake water used for 

cooling, make-up, and process water. 

Facilities would also gather data to 

calculate the reduction in impingement 

mortality and entrainment of all life 

stages of fish and shellfish that would 

be achieved by the technologies and 

operational measures they select. The 

burden estimates include sampling, 

assessing the source waterbody, 

estimating the magnitude of 

impingement mortality and 

entrainment, and reporting results in a 

comprehensive demonstration study. 

The burden may also include 

conducting a pilot study to evaluate the 

suitability of the technologies and 

operational measures based on the 

species that are found at the site. 

Some of the Phase III existing 

facilities (those choosing to use 

restoration measures to maintain fish 

and shellfish) would need to prepare a 

plan documenting the restoration 

measures they would implement and 

how they would demonstrate that the 

restoration measures were effective. 

However, for purposes of this 

paperwork burden analysis, EPA 

assumed all facilities would comply 

using design and construction 

technologies. 

Some facilities may choose to request 

a site-specific determination of best 

technology available because of costs 

significantly greater than those EPA 

considered in establishing the 

performance standards or because costs 

are significantly greater than the 

benefits of complying with the 

performance standards. These facilities 

would be required to perform a 

comprehensive cost evaluation study 

and, if applicable, a valuation of the 

monetized benefits of reducing 

impingement mortality and 

entrainment, as well as submitting a 

site-specific technology plan 

characterizing the design and 

construction technologies, operational 

measures and restoration measures they 

have selected. However, for purposes of 

this paperwork burden estimate, EPA 

assumed all facilities would comply by 

meeting the applicable performance 

standards. 

The assumption that facilities will not 

use restoration or request a site-specific 

determination of best technology 

available may lead to an underestimate 

of paperwork burden, since there are 

additional documentation requirements 

associated with both of these 

approaches. However, since both are 

optional, EPA assumes that facilities 

would not choose them unless total 

burden, including both paperwork 

burden and compliance costs is less 

than the total burden under the 

approach EPA assumed for its PRA 

analysis. 

Exhibits XI–1 through 3 present a 

summary of the average burden 

estimates for a facility to prepare a 

permit application and monitor and 

report on cooling water intake structure 

operations for the three options for 

existing manufacturers as required by 

this proposed rule. Exhibit XI–4 

presents a summary of the average 

burden estimates for a facility to prepare 

a permit application and monitor and 

report on cooling water intake structure 

operations for new offshore oil and gas 

extraction facilities as required by this 

proposed rule. For the purpose of 

estimating the average burden for new 

offshore oil and gas extraction facilities, 

EPA assumed all facilities would pursue 

Track I of today’s proposed rule. It is 

unknown how many facilities would 

select Track I versus Track II so the 

actual burden estimate may be slightly 

higher or lower than that presented in 

this section.

68530 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

EXHIBIT XI–1.—AVERAGE ANNUAL REPORTING BURDEN AND COSTS PER FACILITY FOR NPDES PERMIT APPLICATION AND

MONITORING AND REPORTING ACTIVITIES

[50 MGD all waterbodies option] 

Activities 

Annual 

hours per 

facility 

Annual 

labor cost 

per facility 

Annual capital cost per 

facility 

Annual 

O&M cost 

per facility a

Three year 

respondent 

total 

Average annual frequency of 

responses 

Average annual hours Average annual cost b

Start-up Activities ............. 43 2,121 0 50 56 19 803 40,527 

Permit Application Activities ................................ 247 9,951 0 510 56 19 4,611 195,279 

Proposal for Collection of 

Information for Comprehensive Demonstration Study ..................... 272 12,344 0 770 43 14 3,899 187,964 

FW River/Stream Source 

Water Body Flow Information ........................... 100 3,381 0 200 15 5 500 17,904 

FW Lake/Reservoir 

Source Water Body 

Flow Information ........... 112 3,946 0 200 2 1 75 2,764 

Design and Construction 

Technology Plan (Impingement) .................... 31 1,368 0 0 31 10 320 14,132 

Design and Construction 

Technology Plan (Entrainment) ..................... 31 1,368 0 0 20 7 207 9,117 

Design and Construction 

Technology Plan (All) ... 30 922 0 380 33 11 330 14,322 

Freshwater Baseline Monitoring for Impingement 

Mortality and/or Entrainment Study ................... 2,210 102,549 0 1,538 23 13 29,460 1,387,834 

Freshwater Monitoring for 

Impingement Mortality 

Study ............................ 1,105 51,544 0 773 23 13 14,727 697,560 

Freshwater Monitoring for 

Entrainment Study ........ 845 39,727 0 39,596 4 3 2,252 211,527 

Marine Baseline Monitoring for Impingement 

Mortality and/or Entrainment Study ................... 2,841 131,350 0 1,970 20 19 53,041 2,488,651 

Marine Monitoring for Impingement Mortality 

Study ............................ 1,414 65,430 0 981 16 15 21,680 1,018,309 

Marine Monitoring for Entrainment Study ............ 1,076 50,083 0 51,451 20 19 20,090 1,895,311 

Impingement Mortality & 

Entrainment Characterization Study Initial 

Analysis ........................ 373 22,042 0 0 43 14 5,346 315,931 

Impingement Mortality & 

Entrainment Characterization Study Final Report ............................... 399 18,875 0 614 33 11 4,389 214,381 

Pilot Study Impingement 

Monitoring (Freshwater) 

for Pilot Study ............... 661 33,927 804,252 0 1 0 220 279,393 

Pilot Study Entrainment 

Monitoring (Freshwater) 

for Pilot Study ............... 541 28,473 0 6,000 1 0 180 11,491 

Pilot Study Impingement 

Monitoring (Marine) for 

Pilot Study .................... 831 41,572 189,062 0 10 3 2,768 768,781 

Pilot Study Entrainment 

Monitoring (Marine) for 

Pilot Study .................... 675 34,482 0 7,800 10 3 2,248 140,941 

Pilot Study Entrainment 

Monitoring (All) for Pilot 

Study ............................ 354 17,487 0 1,020 11 4 1,298 67,858 

Technology Installation 

and Operation Plan ...... 52 2,372 0 80 35 12 607 28,611 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68531

EXHIBIT XI–1.—AVERAGE ANNUAL REPORTING BURDEN AND COSTS PER FACILITY FOR NPDES PERMIT APPLICATION AND

MONITORING AND REPORTING ACTIVITIES—Continued

[50 MGD all waterbodies option] 

Activities 

Annual 

hours per 

facility 

Annual 

labor cost 

per facility 

Annual capital cost per 

facility 

Annual 

O&M cost 

per facility a

Three year 

respondent 

total 

Average annual frequency of 

responses 

Average annual hours Average annual cost b

Verification Monitoring 

Plan .............................. 128 5,918 0 410 35 12 1,493 73,827 

Total for NPDES Permit Application Activities .................... .................... .................... .................... .................... 56 227 170,544 10,082,416 

Average Burden and Costs per Facility for Annual Monitoring and Reporting Activities

Annual Monitoring for Impingement (Freshwater) 379 18,504 0 510 11 5 2,021 101,406 

Annual Monitoring for Impingement (Marine) ...... 482 23,564 0 660 12 5 2,569 129,193 

Annual Monitoring for Entrainment (Freshwater) 614 30,376 0 8,310 4 2 1,228 77,371 

Annual Monitoring for Entrainment (Marine) ........ 776 38,069 0 10,800 14 7 5,173 325,790 

Biannual Status Report 

Activities ....................... 324 16,618 0 770 27 9 2,916 156,492 

Verification Study ............. 118 6,772 0 510 27 9 1,062 65,540 

Total for Annual Activities .................... .................... .................... .................... .................... 27 37 14,969 855,792

a Cost of supplies, filing cabinets, photocopying, boat renting, etc. 

b Costs for restoration activities and site-specific studies were not estimated as EPA cannot determine how many facilities would choose to select this option and the option is voluntary. 

EXHIBIT XI–2.—AVERAGE ANNUAL REPORTING BURDEN AND COSTS PER FACILITY FOR NPDES PERMIT APPLICATION AND

MONITORING AND REPORTING ACTIVITIES

[200 MGD all waterbodies option] 

Activity 

Annual 

hours per 

facility 

Annual 

labor cost 

per facility 

Annual capital cost per 

facility 

Annual 

O&M cost 

per facilitya

Three year 

respondent 

total 

Average annual frequency of 

responses 

Average annual hours Average annual cost 

Start-up Activities ............. 43 $2,121 $0 $50 13 4 186 $9,408 

Permit Application Activities ................................ 247 9,951 0 510 13 4 1,070 45,333 

Proposal for Collection of 

Information for Comprehensive Demonstration Study ..................... 272 12,344 0 770 9 3 816 39,341 

FW River/Stream Source 

Water Body Flow Information ........................... 100 3,381 0 200 1 0 33 1,194 

FW Lake/Reservoir 

Source Water Body 

Flow Information ........... .................... 0 0 200 .................... 0 0 0 

Design and Construction 

Technology Plan (Impingement) .................... 31 1,368 0 0 5 2 52 2,279 

Design and Construction 

Technology Plan (Entrainment) ..................... 31 1,368 0 0 4 1 41 1,823 

Design and Construction 

Technology Plan (All) ... 30 922 0 380 5 2 50 2,170 

Freshwater Baseline Monitoring for Impingement 

Mortality and/or Entrainment Study ................... 2,210 102,549 0 1,538 2 1 2,210 104,088 

Freshwater Monitoring for 

Impingement Mortality 

Study ............................ 1,105 51,544 0 773 2 1 1,105 52,317 

Freshwater Monitoring for 

Entrainment Study ........ .................... 0 0 39,596 .................... 0 0 0 

68532 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

EXHIBIT XI–2.—AVERAGE ANNUAL REPORTING BURDEN AND COSTS PER FACILITY FOR NPDES PERMIT APPLICATION AND

MONITORING AND REPORTING ACTIVITIES—Continued

[200 MGD all waterbodies option] 

Activity 

Annual 

hours per 

facility 

Annual 

labor cost 

per facility 

Annual capital cost per 

facility 

Annual 

O&M cost 

per facilitya

Three year 

respondent 

total 

Average annual frequency of 

responses 

Average annual hours Average annual cost 

Marine Baseline Monitoring for Impingement 

Mortality and/or Entrainment Study ................... 2,841 131,350 0 1,970 7 6 17,049 799,923 

Marine Monitoring for Impingement Mortality 

Study ............................ 1,414 65,430 0 981 6 5 7,541 354,194 

Marine Monitoring for Entrainment Study ............ 1,076 50,083 0 51,451 7 6 6,458 609,207 

Impingement Mortality & 

Entrainment Characterization Study Initial 

Analysis ........................ 373 22,042 0 0 9 3 1,119 66,125 

Impingement Mortality & 

Entrainment Characterization Study Final Report ............................... 399 18,875 0 614 5 2 665 32,482 

Pilot Study Impingement 

Monitoring (Freshwater) 

for Pilot Study ............... 661 33,927 804,252 0 1 0 220 279,393 

Pilot Study Entrainment 

Monitoring (Freshwater) 

for Pilot Study ............... 541 28,473 0 6,000 1 0 180 11,491 

Pilot Study Impingement 

Monitoring (Marine) for 

Pilot Study .................... 831 41,572 183,241 0 4 1 1,107 299,751 

Pilot Study Entrainment 

Monitoring (Marine) for 

Pilot Study .................... 675 34,482 0 7,800 4 1 899 56,376 

Pilot Study Entrainment 

Monitoring (All) for Pilot 

Study ............................ 354 17,487 0 1,020 5 2 590 30,845 

Technology Installation 

and Operation Plan ...... 52 2,372 0 80 6 2 104 4,905 

Verification Monitoring 

Plan .............................. 128 5,918 0 410 6 2 256 12,656 

Total for NPDES Permit Application Activities .................... .................... .................... .................... .................... 13 50 41,752 2,815,302 

Average Burden and Costs per Facility for Annual Monitoring and Reporting Activities

Annual Monitoring for Impingement (Freshwater) 379 18,504 0 510 1 1 253 12,676 

Annual Monitoring for Impingement (Marine) ...... 482 23,564 0 660 3 1 482 24,224 

Annual Monitoring for Entrainment (Freshwater) 614 30,376 0 8,310 1 0 205 12,895 

Annual Monitoring for Entrainment (Marine) ........ 776 38,069 0 10,800 3 1 776 48,869 

Biannual Status Report 

Activities ....................... 324 16,618 0 770 5 2 540 28,980 

Verification Study ............. 118 6,772 0 510 5 2 197 12,137 

Total for Annual Activities .................... .................... .................... .................... .................... 5 7 2,452 139,780 

a Cost of supplies, filing cabinets, photocopying, boat renting, etc. 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68533

EXHIBIT XI–3.—AVERAGE ANNUAL REPORTING BURDEN AND COSTS PER FACILITY FOR NPDES PERMIT APPLICATION AND

MONITORING AND REPORTING ACTIVITIES

[100 MGD certain waterbodies option] 

Activity 

Annual 

hours per 

facility 

Annual 

labor cost 

per facility 

Annual capital cost per 

facility 

Annual 

O&M cost 

per facility a

Three year 

respondent 

total 

Average annual frequency of 

responses 

Aveage annual hours Average annual cost 

Start-up Activities ............. 43 $2,121 $0 $50 11 4 158 $7,961 

Permit Application Activities ................................ 247 9,951 0 510 11 4 906 38,358 

Proposal for Collection of 

Information for Comprehensive Demonstration Study ..................... 272 12,344 0 770 11 4 997 48,084 

FW River/Stream Source 

Water Body Flow Information ........................... — 000 — 0 0 0 

FW Lake/Reservoir 

Source Water Body 

Flow Information ........... — 000 — 0 0 0 

Design and Construction 

Technology Plan (Impingement) .................... 31 1,368 0 0 8 3 83 3,647 

Design and Construction 

Technology Plan (Entrainment) ..................... 31 1,368 0 0 8 3 83 3,647 

Design and Construction 

Technology Plan (All) ... 30 922 0 380 8 3 80 3,472 

Freshwater Baseline Monitoring for Impingement 

Mortality and/or Entrainment Study ................... — 0 0 1,538 — 0 0 0 

Freshwater Monitoring for 

Impingement Mortality 

Study ............................ — 0 0 773 — 0 0 0 

Freshwater Monitoring for 

Entrainment Study ........ — 0 0 039,596 — 0 0 0 

Marine Baseline Monitoring for Impingement 

Mortality and/or Entrainment Study ................... 2,841 131,350 0 1,970 11 10 28,415 1,333,206 

Marine Monitoring for Impingement Mortality 

Study ............................ 1,414 65,430 0 981 10 9 13,1976 19,840 

Marine Monitoring for Entrainment Study ............ 1,076 50,083 0 051,451 11 10 10,763 1,015,345 

Impingement Mortality & 

Entrainment Characterization Study Initial 

Analysis ........................ 373 22,042 0 0 11 4 1,368 80,820 

Impingement Mortality & 

Entrainment Characterization Study Final Report ............................... 399 18,875 0 614 8 3 1,064 51,971 

Pilot Study Impingement 

Monitoring (Freshwater) 

for Pilot Study ............... — 000 — 0 0 0 

Pilot Study Entrainment 

Monitoring (Freshwater) 

for Pilot Study ............... — 0 0 6,000 — 0 0 0 

Pilot Study Impingement 

Monitoring (Marine) for 

Pilot Study .................... 831 41,572 221,548 0 6 2 1,661 526,240 

Pilot Study Entrainment 

Monitoring (Marine) for 

Pilot Study .................... 675 34,482 0 7,800 6 2 1,349 84,564 

Pilot Study Entrainment 

Monitoring (All) for Pilot 

Study ............................ 354 17,487 0 1,020 6 2 708 37,014 

Technology Installation 

and Operation Plan ...... 52 2,372 0 80 8 3 139 6,540 

68534 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

EXHIBIT XI–3.—AVERAGE ANNUAL REPORTING BURDEN AND COSTS PER FACILITY FOR NPDES PERMIT APPLICATION AND

MONITORING AND REPORTING ACTIVITIES—Continued

[100 MGD certain waterbodies option] 

Activity 

Annual 

hours per 

facility 

Annual 

labor cost 

per facility 

Annual capital cost per 

facility 

Annual 

O&M cost 

per facility a

Three year 

respondent 

total 

Average annual frequency of 

responses 

Aveage annual hours Average annual cost 

Verification Monitoring 

Plan .............................. 128 5,918 0 410 8 3 341 16,875 

Total for NPDES Permit Application Activities .................... .................... .................... .................... .................... 11 66 61,310 3,877,583

Average Burden and Costs per Facility for Annual Monitoring and Reporting Activities

Annual Monitoring for Impingement (Freshwater) — 0 0 510 — 0 0 0 

.

Annual Monitoring for Impingement (Marine) ...... 482 23,564 0 660 7 3 1,284 64,596 

Annual Monitoring for Entrainment (Freshwater) — 0 0 8,310 — 0 0 0 

Annual Monitoring for Entrainment (Marine) ........ 776 38,069 0 10,800 7 3 2,069 130,316 

Biannual Status Report 

Activities ....................... 324 16,618 0 770 7 2 756 40,572 

Verification Study ............. 118 6,772 0 510 7 2 275 16,992 

Total for Annual Activities .................... .................... .................... .................... .................... 7 10 4,385 252,476 

a Cost of supplies, filing cabinets, photocopying, boat renting, etc. 

EXHIBIT XI–4.—AVERAGE ANNUAL REPORTING BURDEN AND COSTS PER FACILITY FOR NPDES PERMIT APPLICATION AND

MONITORING AND REPORTING ACTIVITIES

[New offshore oil and gas extraction facilities a] 

Activity 

Annual 

hours per 

facility 

Annual 

labor cost 

per facility 

Annuallized 

capital cost 

per facility 

Annual 

O&M cost 

per facilitya b

Three year 

respondent 

total 

Average annual frequency of 

responses 

Average annual hours Average annual cost 

Start-up Activities ............. 43 $2,121 $0 $50 31 10 444 $22,435 

Permit Application Activities ................................ 25 795 0 130 19 6 158 5,857 

Source Water Body Flow 

Information .................... 38 1,341 0 75 19 6 241 8,968 

CWIS Velocity Information — 000 — 0 0 0 

Design and Construction 

Technology Plan (Impingement Only) ........... 35 1,021 0 120 15 5 175 5,706 

Design and Construction 

Technology Plan (Entrainment Only) ............. 35 1,021 0 120 1 0 12 380 

Design and Construction 

Technology Plan (Impingement & Entrainment) ............................ 38 1,162 0 120 3 1 38 1,282 

Develop Regional Study 

Design and Submit to 

Director ......................... 78 5,007 0 0 2 1 52 3,338 

Deep Water Baseline 

Monitoring for Source 

Water Baseline Biological Characterization 

Study ............................ 309 17,260 0 43,200 9 9 2,778 544,137 

Deep Water Impingement 

Monitoring for Source 

Water Baseline Biological Characterization 

Study ............................ 144 7,987 7,621 667 9 9 1,296 146,473 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68535

EXHIBIT XI–4.—AVERAGE ANNUAL REPORTING BURDEN AND COSTS PER FACILITY FOR NPDES PERMIT APPLICATION AND

MONITORING AND REPORTING ACTIVITIES—Continued

[New offshore oil and gas extraction facilities a] 

Activity 

Annual 

hours per 

facility 

Annual 

labor cost 

per facility 

Annuallized 

capital cost 

per facility 

Annual 

O&M cost 

per facilitya b

Three year 

respondent 

total 

Average annual frequency of 

responses 

Average annual hours Average annual cost 

Deep Water Entrainment 

Monitoring for Source 

Water Baseline Biological Characterization 

Study ............................ 144 7,987 0 3,120 3 3 432 33,321 

Alaska Basline Monitoring 

for Source Water Baseline Biological Characterization Study ............. 384 20,337 0 49,200 1 1 384 69,537 

Alaska Entrainment Monitoring for Source Water 

Baseline Biological 

Characterization Study 192 10,169 0 3,120 1 1 192 13,289 

Initial Sourcewater Baseline Biological Characterization Data .............. 366 20,584 0 0 10 3 1,220 68,613 

Sourcewater Baseline Biological Characterization 

Data Study Final Regional Report ................ 288 18,389 0 0 2 1 192 12,259 

Use Regional Study Results for Individual Facility Studies ..................... 166 7,591 0 0 19 6 1,051 48,079 

Source Water Baseline Biological Characterization Study Other Direct 

Costs for Deep Water .. — 0 0 13,270 9 3 0 39,810 

Source Water Baseline Biological Characterization Study Other Direct 

Costs for Alaska ........... — 0 0 19,910 1 0 0 6,637 

Total for NPDES Permit Application Activities .................... .................... .................... .................... .................... 31 67 8,665 1,030,123 

Average Burden and Costs per Facility for Annual Monitoring and Reporting Activities

Biological Monitoring for 

Impingement ................. 530 25,823 0 1,660 — 0 0 0 

Biological Monitoring for 

Entrainment .................. 370 17,647 0 15,780 — 0 0 0 

Biological Monitoring for 

Entrainment (Alaska) .... 516 24,298 0 21,780 — 0 0 0 

Velocity Monitoring ........... 163 5,692 0 500 13 7 1,087 41,283 

Yearly Status Report Activities ............................ 223 11,304 0 770 13 7 1,487 80,495 

Total for Annual Activities .................... .................... .................... .................... .................... 13 14 2,573 121,778 

aTrack I requirements only estimated. 

b Cost of supplies, filing cabinets, photocopying, boat renting, etc. 

EPA believes that all 45 States and 

one Territory with NPDES permitting 

authority would undergo start-up 

activities in preparation for 

administering the provisions of the 

proposed rule. As part of these start-up 

activities, States and Territories would 

be expected to train junior technical 

staff to review materials submitted by 

facilities, and then use these materials 

to evaluate compliance with the specific 

conditions of each facility’s NPDES 

permit. 

Each State’s/Territory’s actual burden 

associated with reviewing submitted 

materials, writing permits, and tracking 

compliance would depend on the 

number of in-scope facilities that would 

come up for permit renewal in the State/

Territory during the ICR approval 

period and which flow threshold-based 

option EPA selects for Phase III existing 

facilities. EPA expects that State and 

Territory technical and clerical staff will 

spend time gathering, preparing, and 

submitting the various documents. 

EPA’s burden estimates reflect the 

general staffing and level of expertise 

that is typical in States/Territories that 

administer the NPDES permitting 

program. EPA considered the time and 

qualifications necessary to complete 

various tasks such as reviewing 

68536 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

submitted documents and supporting 

materials, verifying data sources, 

planning responses, determining 

specific permit requirements, writing 

the actual permit, and conferring with 

facilities and the interested public. 

Exhibits XI–5 through 7 provide a 

summary of the average burden 

estimates for States/Territories 

performing various activities for existing 

manufacturing facilities required by the 

proposed rule. States/Territories are not 

involved in administering the permits 

for new offshore oil and gas extraction 

facilities since the offshore oil and gas 

industry is currently permitted under 

general permits at the regional EPA 

level. This practice is likely to continue 

in the forseeable future.

EXHIBIT XI–5.—ESTIMATING STATE/TERRITORY AVERAGE BURDEN AND COSTS FOR ACTIVITIES

[50 MGD all waterbodies option] 

Activity 

Average annual hours 

per facility 

Annual 

labor cost 

per facility 

Annual capital cost per 

facility 

Annual 

O&M cost 

per facility a

Three year 

respondent 

total 

Average annual frequency of 

responses 

Average annual hours Average annual cost 

Director Start-up Activities 100 $3,894 $0 $50 46 15 1,533 $60,475

Director Permit Issuance 

Activities ....................... 803 35,979 0 310 56 19 14,989 677,398

Verification Study Review — 0 0 10 — 000

Annual Director Activities 50 1,851 0 30 27 9 450 16,932

Total for Director Activities .................... .................... .................... .................... .................... 46 43 16,972 754,804

a Cost of supplies, filing cabinets, photocopying, boat renting, etc. 

EXHIBIT XI–6.—ESTIMATING STATE/TERRITORY AVERAGE BURDEN AND COSTS FOR ACTIVITIES

[200 MGD all waterbodies option] 

Activity 

Average annual hours 

per facility 

Annual 

labor cost 

per facility 

Annual capital cost per 

facility 

Annual 

O&M cost 

per facility a

Three year 

respondent 

total 

Average annual frequency of 

responses 

Average annual hours Average annual cost 

Director Start-up Activities 100 $3,894 $0 $50 46 15 1,533 $60,475

Director Permit Issuance 

Activities ....................... 706 31,417 0 310 13 .................... 43,060 137,482

Verification Study Review — 0 0 10 — 000

Annual Director Activities 50 1,851 0 30 5 2 83 3,136

Total for Director Activities .................... .................... .................... .................... .................... 46 21 4,677 201,092

a Cost of supplies, filing cabinets, photocopying, boat renting, etc. 

EXHIBIT XI–7.—ESTIMATING STATE/TERRITORY AVERAGE BURDEN AND COSTS FOR ACTIVITIES

[100 MGD All Waterbodies Option] 

Activity 

Average annual hours 

per facility 

Annual 

labor cost 

per facility 

Annual capital cost per 

facility 

Annual 

O&M cost 

per facility a

Three year 

respondent 

total 

Average annual frequency of 

responses 

Average annual hours Average annual cost 

Director Start-up Activities 100 $3,894 $0 $50 46 15 1,533 $60,475

Director Permit Issuance 

Activities ....................... 1330 60,163 0 310 11 4 4,878 221,733

Verification Study Review — 0 0 10 — 000

Annual Director Activities 50 1,851 0 30 7 2 117 4,390

Total for Director Activities .................... .................... .................... .................... .................... 46 21 6,528 286,598

a Cost of supplies, filing cabinets, photocopying, boat renting, etc. 

An Agency may not conduct or 

sponsor, and a person is not required to 

respond to a collection of information 

unless it displays a currently valid OMB 

control number. The OMB control 

numbers for EPA’s regulations in 40 

CFR are listed in 40 CFR Part 9. 

To comment on the Agency’s need for 

this information, the accuracy of the 

provided burden estimates, and any 

suggested methods for minimizing 

respondent burden, including the use of 

automated collection techniques, EPA 

has established a public docket for this 

rule, which includes this ICR, under 

Docket ID number OW–2003–0005. 

Submit any comments related to the ICR 

for this proposed rule to EPA and OMB. 

See ‘‘Addresses’’ section at the 

beginning of this notice for where to 

submit comments to EPA. Send 

comments to OMB at the Office of 

Information and Regulatory Affairs, 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68537

Office of Management and Budget, 725 

17th Street, NW., Washington, DC 

20503, Attention: Desk Office for EPA. 

Since OMB is required to make a 

decision concerning the ICR between 30 

and 60 days after November 24, 2004, a 

comment to OMB is best assured of 

having its full effect if OMB receives it 

by December 27, 2004. The final rule 

will respond to any OMB or public 

comments on the information collection 

requirements contained in this proposal. 

C. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

as amended by the Small Business 

Regulatory Flexibility Act generally 

requires an agency to prepare a 

regulatory flexibility analysis of any rule 

subject to notice and comment 

rulemaking requirements under the 

Administrative Procedure Act or any 

other statute unless the agency certifies 

that the rule will not have a significant 

economic impact on a substantial 

number of small entities. This section 

summarizes EPA’s analyses in 

compliance with the RFA. 

1. Definition of Small Entity 

Small entities include small 

businesses, small organizations, and 

small governmental jurisdictions. For 

assessing the impacts of today’s 

proposal on small entities, a small entity 

is defined as: (1) A small business as 

defined by the Small Business 

Administration’s (SBA) regulations at 13 

CFR 121.201; (2) a small governmental 

jurisdiction that is a government of a 

city, county, town, school district or 

special district with a population of less 

than 50,000; and (3) a small 

organization that is any not-for-profit 

enterprise which is independently 

owned and operated and is not 

dominant in its field. 

The SBA small business size 

standards changed from a SIC codebased system to a NAICS code-based 

system on October 1, 2000. Since EPA 

conducted its data collection effort for 

existing facilities before this change, 

EPA performed the small entity analysis 

for existing facilities based on SIC 

codes. EPA then conducted a 

subsequent analysis to determine if the 

size standards based on NAICS codes 

would have any effect on the results of 

the small entity analysis. This analysis 

showed that for the three co-proposed 

options, there would be no changes to 

the small entity determination, and 

therefore to small entity impacts, as a 

result of switching from SIC-based size 

standards to NAICS-based size 

standards. 

2. Certification Statement 

After considering the economic 

impacts of today’s proposal on small 

entities, I certify that this action will not 

have a significant economic impact on 

a substantial number of small entities. 

This proposal applies to existing 

facilities that employ a cooling water 

intake structure and are designed to 

withdraw either (1) 50 MGD or more 

from all waterbodies, (2) 100 MGD or 

more from certain waterbodies, or (3) 

200 MGD or more from all waterbodies 

that are waters of the United States. It 

also applies to new offshore oil and gas 

extraction facilities that withdraw 

greater than 2 MGD from waters of the 

United States. 

3. Statement of Basis 

EPA estimates that this proposal will 

not apply national categorical standards 

to any small entities in the 

Manufacturers or Electric Generators 

industry segments (entities that operate 

facilities subject to permitting based on 

best professional judgement are 

excluded from this analysis). In the new 

offshore oil and gas extraction industry 

segment, EPA estimates that the 

proposed option will apply national 

standards to only one small entity, a 

new offshore oil and gas platform. EPA 

estimates that this entity would incur 

annualized, after-tax compliance costs 

of less than 0.1 percent of annual 

revenue. EPA does not know precisely 

which firms would be undertaking 

construction of new offshore oil and gas 

extraction facilities. However, based on 

the firms that are currently active in 

building the types of facilities 

representative of those covered by the 

rulemaking, EPA believes that the small 

firm analyzed represents the smallest 

firm that would be involved in such 

activities over the period of the analysis. 

4. Summary of Small Business 

Advocacy Review Panel 

Although the RFA does not require a 

Small Business Advocacy Review 

(SBAR) Panel for this rule (because EPA 

has determined that this proposal would 

not have a significant economic impact 

on a substantial number of small 

entities), EPA convened a panel to 

obtain advice and recommendations 

from small entity representatives (SERs) 

potentially subject to this proposed 

rule’s requirements because at the time 

EPA had not yet determined the scope 

of the proposed rule and thus the 

potential for small entity impacts. This 

section summarizes EPA’s small entity 

outreach and information on the 

composition, process, and findings of 

the SBAR panel. 

a. Summary of Small Entity Outreach 

EPA actively involved stakeholders, 

including small entities, in the 

development of the proposed rule in 

order to ensure the quality of 

information, identify and understand 

potential implementation and 

compliance issues, and explore 

regulatory alternatives. EPA conducted 

numerous meetings with the electric 

power industry over the past six years 

and met twice with manufacturing 

industry representatives in the past two 

years; during these meetings, EPA 

received direct input about the impacts 

of the proposed rule on the industry.

In the past three years, EPA held two 

conference calls with small entity 

representatives from the manufacturing 

and electric power industries to 

improve the Agency’s understanding of 

cooling water intakes in these 

industries, and of the potential impacts 

of new requirements from an economic 

and business perspective. Before 

convening the Panel, EPA held a 

conference call/meeting on October 1, 

2002, and another on January 22, 2004, 

to receive information from prospective 

SERs about plans for convening the 

Panel and their early concerns about the 

planned proposed regulation. 

b. Panel Members 

The Panel consisted of EPA’s Small 

Business Advocacy Chairperson, the 

Director of the Engineering and Analysis 

Division of the Office of Science and 

Technology (EPA/OW), the 

Administrator of the Office of 

Information and Regulatory Affairs 

within the Office of Management and 

Budget (OMB), and the Chief Counsel 

for Advocacy of the Small Business 

Administration (SBA). 

c. SERs 

After consultation with the Small 

Business Administration Office of 

Advocacy, EPA invited six municipal 

power plant representatives and six 

representatives from manufacturing 

industries to serve as potential SERs 

during the pre-panel outreach process. 

Ultimately, three municipal power plant 

representatives and four representatives 

from manufacturing industries provided 

comments to the Panel. 

d. Summary of Panel Process 

The Panel convened on February 27, 

2004. The Panel held an outreach 

meeting and telephone conference for 

SERs on March 16, 2004. Materials were 

provided to SERs in advance of the 

meeting and additional materials on 

specific topics of interest to SERs were 

provided during the Panel process. SERs 

provided comments to the Panel on (1) 

68538 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

the number and types of small entities 

affected; (2) potential reporting, record 

keeping, and compliance requirements; 

(3) related Federal rules; (4) regulatory 

flexibility alternatives; and (5) 

methodological issues. 

The Panel evaluated the assembled 

materials and small entity comments on 

issues related to the elements of the 

initial regulatory flexibility analysis 

(IRFA). A copy of the Panel report, 

‘‘Final Report of the Small Business 

Advocacy Review Panel on EPA’s 

Planned Proposed Rule for Cooling 

Water Intake Structures at Section 

316(b) Phase III Facilities,’’ is included 

in the docket for this proposed rule 

(DCN 7–0006). 

e. Panel Recommendations 

The Panel provided several 

recommendations pertaining to 

reporting, record keeping, and 

compliance requirements; regulatory 

flexibility alternatives; and 

methodological issues relevant to the 

assessment of the impacts of a Phase III 

rule on small entities. The following is 

a summary of the Panel’s 

recommendations and EPA’s responses: 

• Recommendation: The Panel noted 

that significant implementation 

flexibility was included in the Phase II 

rule. For example, facilities were 

allowed up to three and one half years 

following rule promulgation to submit 

their initial demonstration study and 

related application materials. The Panel 

recommended that this level of 

flexibility be provided for Phase III 

requirements. The Panel also 

recommended that EPA consider the 

availability of contractor resources as it 

develops the implementation schedule 

for Phase III. 

Response: EPA has provided in the 

proposed rule the same implementation 

flexibility contained in the Phase II rule. 

EPA will consider the availability of 

contractor resources and would like to 

receive comments on this issue. 

• Recommendation: The Panel 

recommended that EPA analyze a range 

of potential applicability thresholds, 

particularly those between 20 MGD and 

50 MGD. The Panel believed that an 

effective way to substantially reduce 

potential economic impacts on small 

entities would be to set an applicability 

threshold of 20 MGD. Facilities below 

20 MGD represent a small proportion of 

the total flow associated with the Phase 

III rulemaking. 

Response: In response to the Panel’s 

recommendations, EPA analyzed several 

policy options with different regulatory 

requirements and applicability 

thresholds based on flow range 

categories. As a result of these analyses, 

EPA is co-proposing three options with 

minimum applicability thresholds of 50 

MGD, 100 MGD, and 200 MGD, 

respectively. Under these thresholds, no 

Phase III existing facilities owned by 

small entities would be subject to 

national categorical requirements. 

• Recommendation: The Panel 

recognized the implementation 

challenges associated with using actual 

flows instead of design flows to 

structure regulatory requirements. 

However, the Panel believed that this 

approach merits further consideration. 

Response: EPA notes that since the 

proposed thresholds exclude existing 

small entities, no implementation 

challenges to small entities would 

result. With regard to facilities within 

the scope of the proposed rule, EPA 

believes that it would be most 

appropriate to be consistent with the 

regulatory approach taken in Phase II. 

• Recommendation: The American 

Public Power Association (APPA) raised 

several methodological issues regarding 

EPA’s analysis of the impacts of a Phase 

III rule on small entities, including 

alternate estimates of the number of 

regulated small electric utilities and 

issues concerning the downtime 

required for retrofitting. The Panel 

recommended that EPA seek further 

information from APPA to identify any 

necessary modifications to the 

assumptions used for its cost and 

economic impact analyses. The Panel 

also recommended that EPA review its 

assumptions used to develop costs and 

economic impacts to ensure that these 

assumptions are appropriate for 

facilities with smaller budgets and 

staffs. 

Response: Because of the choice EPA 

made to propose larger design intake 

flow thresholds (i.e., 50 MGD, 100 MGD, 

and 200 MGD), all electric power 

producers not covered by Phase II will 

be exempt from the national categorical 

requirements of this proposed rule, but 

will continue to be subject to sitespecific 316(b) requirements based on 

the best professional judgment of the 

permit writer.

5. Small Entity Flexibility Analysis 

Despite the determination that this 

rule would not have a significant 

economic impact on a substantial 

number of small entities, EPA prepared 

a Small Entity Flexibility Analysis that 

has all the components of an Initial 

Regulatory Flexibility Analysis (IRFA). 

An IRFA examines the impact of a 

proposed rule on small entities along 

with regulatory alternatives that could 

reduce that impact. The Small Entity 

Flexibility Analysis (which is described 

in detail in the Economic Analysis 

document) is available for review in the 

docket. 

Under the three co-proposed options, 

EPA estimates that only one small entity 

(a new offshore oil and gas extraction 

facility) would be subject to the national 

categorical requirements. Under these 

thresholds, no Phase III existing 

facilities owned by small entities would 

be subject to national categorical 

requirements. This facility is estimated 

to have a cost-to-revenue ratio of less 

than 0.1 percent. 

EPA continues to be interested in the 

potential impacts of this proposal on 

small entities and welcomes comments 

on issues related to such impacts. 

D. Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA), Pub. L. 

104–4, establishes requirements for 

Federal agencies to assess the effects of 

their regulatory actions on State, local, 

and Tribal governments and the private 

sector. Under section 202 of the UMRA, 

EPA generally must prepare a written 

statement, including a cost-benefit 

analysis, for proposed and final rules 

with ‘‘Federal mandates’’ that may 

result in expenditures to State, local, 

and Tribal governments, in the 

aggregate, or to the private sector, of 

$100 million or more in any one year. 

Before promulgating an EPA rule for 

which a written statement is needed, 

section 205 of the UMRA generally 

requires EPA to identify and consider a 

reasonable number of regulatory 

alternatives and adopt the least costly, 

most cost-effective, or least burdensome 

alternative that achieves the objectives 

of the rule. The provisions of section 

205 do not apply when they are 

inconsistent with applicable law. 

Moreover, section 205 allows EPA to 

adopt an alternative other than the least 

costly, most cost-effective, or least 

burdensome alternative if the 

Administrator publishes with the final 

rule an explanation why that alternative 

was not adopted. Before EPA establishes 

any regulatory requirements that may 

significantly or uniquely affect small 

governments, including Tribal 

governments, it must have developed 

under section 203 of the UMRA, a small 

government agency plan. The plan must 

provide for notifying potentially 

affected small governments, enabling 

officials of affected small governments 

to have meaningful and timely input in 

the development of EPA regulatory 

proposals with significant 

intergovernmental mandates, and 

informing, educating, and advising 

small governments on compliance with 

regulatory requirements. 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68539

57These sections exclude facilities estimated to 

be baseline closures and their costs (see discussion 

in section VIII.B.2) and administrative costs for 

Federal agencies.

58Total social costs of this proposal, including 

existing and new facilities, are presented in section 

VIII.C of this preamble.

59Benefits include only use benefits from 

commercial and recreational fishing. EPA was 

unable to monetize non-use benefits.

The following subsections present a 

brief summary of UMRA considerations 

for the proposed rule. Each subsection 

includes the results of the proposed 

option for new offshore oil and gas 

extraction facilities together with one of 

the three co-proposed options for 

existing facilities.57

• 2 MGD Option for new facilities and 

50 MGD All Waterbodies Option for 

existing facilities: EPA estimates the 

total annualized after-tax costs of 

compliance to be $44.8 million (2003$). 

All of these direct facility costs are 

incurred by the private sector (including 

136 manufacturing facilities and 124 

offshore oil and gas extraction facilities). 

No facility owned by State or local 

governments is subject to the national 

requirements under this proposed 

option. Additionally, State and local 

permitting authorities are estimated to 

incur $0.5 million annually to 

administer this option, including labor 

costs to write permits and to conduct 

compliance monitoring and 

enforcement activities. As required per 

section 202 of the UMRA, EPA estimates 

that the highest undiscounted after-tax 

cost incurred by the private sector in 

any one year is approximately $280 

million in 2011. 

• 2 MGD Option for new facilities and 

200 MGD All Waterbodies Option for 

existing facilities: EPA estimates the 

total annualized after-tax costs of 

compliance to be $21.4 million (2003$). 

All of these direct facility costs are 

incurred by the private sector (including 

25 manufacturing facilities and 124 

offshore oil and gas extraction facilities). 

No facility owned by State or local 

governments is subject to the national 

requirements under this proposed 

option. Additionally, State and local 

permitting authorities are estimated to 

incur $0.1 million annually to 

administer this option, including labor 

costs to write permits and to conduct 

compliance monitoring and 

enforcement activities. As required per 

section 202 of the UMRA, EPA estimates 

that the highest undiscounted after-tax 

cost incurred by the private sector in 

any one year is approximately $91 

million in 2010. 

• 2 MGD Option for new facilities and 

100 MGD for Certain Waterbodies 

Option for existing facilities: EPA 

estimates the total annualized after-tax 

costs of compliance to be $17.4 million 

(2003$). All of these direct facility costs 

are incurred by the private sector 

(including 19 manufacturing facilities 

and 124 offshore oil and gas extraction 

facilities). No facility owned by State or 

local governments is subject to the 

national requirements under this 

proposed option. Additionally, State 

and local permitting authorities are 

estimated to incur $0.1 million annually 

to administer this option, including 

labor costs to write permits and to 

conduct compliance monitoring and 

enforcement activities. As required per 

section 202 of the UMRA, EPA estimates 

that the highest undiscounted after-tax 

cost incurred by the private sector in 

any one year is approximately $236 

million in 2011. 

Thus, EPA has determined that this 

proposal contains a Federal mandate 

that may result in expenditures of $100 

million or more for State, local, and 

Tribal governments, in the aggregate, or 

the private sector in any one year. 

Accordingly, EPA prepared a written 

statement under section 202 of the 

UMRA, which is summarized below. 

(See Economic Analysis, Chapter D2: 

UMRA Analysis, for more detailed 

information.)

1. Summary of Written Statement 

a. Authorizing Legislation 

This proposal is issued under the 

authority of sections 101, 301, 304, 306, 

308, 316, 401, 402, 501, and 510 of the 

Clean Water Act (CWA), 33 U.S.C. 1251, 

1311, 1314, 1316, 1318, 1326, 1341, 

1342, 1361, and 1370. This proposal 

fulfills an obligation of the U.S. 

Environmental Protection Agency (EPA) 

under a consent decree in Riverkeeper, 

Inc. et al. v. Leavitt, United States 

District Court, Southern District of New 

York, No. 93 Civ. 0314 (AGS). See 

section II of this preamble for detailed 

information on the legal authority of 

this regulation. 

b. Cost-Benefit Analysis 

For the analysis of costs and benefits 

to society of this proposal, the Agency 

calculated a total present value of 

estimated costs and benefits and then 

calculated the constant annual 

equivalent value (annualized value) of 

these present values. The Agency 

calculated these present values and 

annualized values using two social 

discount rate values: 3 percent and 7 

percent. Since benefits for new offshore 

oil and gas extraction facilities could 

not be estimated, EPA’s comparison of 

costs and benefits includes only costs 

associated with Phase III existing 

facilities (i.e., the Manufacturers 

industry segments—no Electric 

Generators are subject to the national 

requirements under any of the coproposed options).58 Benefit-cost 

relationships for Phase III existing 

facilities under the three co-proposed 

options are as follows:59

• 50 MGD All Waterbodies Option:

Total annualized social costs are 

estimated at $47.3 (3 percent discount 

rate) and $50.1 million (7 percent 

discount rate). Total mean value of 

annualized use benefits are estimated at 

$1.9 million (3 percent discount rate) 

and $1.5 million (7 percent discount 

rate). Thus, social costs exceed total use 

benefits by $45.4 million (3 percent 

discount rate) and $48.6 million (7 

percent discount rate). 

• 200 MGD All Waterbodies Option:

Total annualized social costs are 

estimated at $22.8 (3 percent discount 

rate) and $24.1 million (7 percent 

discount rate). Total mean value of 

annualized use benefits are estimated at 

$1.3 million (3 percent discount rate) 

and $1.0 million (7 percent discount 

rate). Thus, social costs exceed total use 

benefits by $21.5 million (3 percent 

discount rate) and $23.1 million (7 

percent discount rate) 

• 100 MGD for Certain Waterbodies 

Option: Total annualized social costs 

are estimated at $17.6 (3 percent 

discount rate) and $18.3 million (7 

percent discount rate). Total mean value 

of annualized use benefits are estimated 

at $1.4 million (3 percent discount rate) 

and $1.1 million (7 percent discount 

rate). Thus, social costs exceed total use 

benefits by $16.2 million (3 percent 

discount rate) and $17.2 million (7 

percent discount rate). 

It should be noted that this costbenefit analysis compares a relatively 

complete measure of social costs with 

an incomplete measure of benefits, and 

should be interpreted with caution. For 

a more detailed comparison of the costs 

and benefits of the proposed rule, 

including a qualitative discussion and 

‘‘break-even’’ analysis of non-use 

benefits, refer to section X of this 

preamble. 

EPA notes that States may be able to 

use existing sources of financial 

assistance to revise permits and 

implement the proposed options, when 

promulgated. Section 106 of the Clean 

Water Act authorizes EPA to award 

grants to States, Tribes, intertribal 

consortia, and interstate agencies for 

administering programs for the 

prevention, reduction, and elimination 

of water pollution. These grants may be 

used for various activities to develop 

68540 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

and carry out a water pollution control 

program, including permitting, 

monitoring, and enforcement. Thus, 

State and Tribal NPDES permit 

programs represent one type of State 

program that can be funded by section 

106 grants. 

c. Macro-Economic Effects 

EPA estimates that this proposal 

would not measurably affect the 

national economy, including 

productivity, economic growth, 

employment and job creation, and 

international competitiveness of U.S. 

goods and services. Macroeconomic 

effects on the economy are generally not 

considered to be measurable unless the 

total economic impact of a rule reaches 

at least 0.25 percent to 0.5 percent of 

Gross Domestic Product (GDP). In 2003, 

the Bureau of Economic Analysis 

reported the nominal U.S. GDP at $11.0 

trillion. Thus, in order to be considered 

measurable, this proposal would have to 

generate annualized costs of at least $27 

billion to $55 billion. Since EPA 

estimates that total social costs 

(including existing and new facilities) 

under the most costly of the three 

proposed options for existing facilities, 

the 50 MGD All Waterbodies option, 

would be $51 million at a 3 percent 

discount rate and $53 million at a 7 

percent discount rate, the Agency 

believes that this proposal would not 

perceptibly affect the national economy. 

d. Summary of State, Local, and Tribal 

Government Input 

EPA consulted with State 

governments and representatives of 

local governments in developing the 

regulation. The outreach activities are 

discussed in section III of this preamble. 

e. Least Burdensome Option 

EPA considered and analyzed several 

alternative regulatory options for 

existing facilities to determine the best 

technology available for minimizing 

adverse environmental impact. These 

regulatory options are discussed in 

section VI of this preamble. EPA is coproposing these three options because 

they would meet the requirement of 

section 316(b) of the CWA—that the 

location, design, construction, and 

capacity of cooling water intake 

structures reflect the best technology 

available for minimizing adverse 

environmental impact—and because 

they are economically achievable, 

address a large percentage of flow (in 

combination with the Phase II rule), are 

highly flexible, and impact a minimal 

number of small businesses. EPA 

believes the three co-proposed options 

would reflect the most cost-effective and 

flexible approaches among the options 

considered. They regulate 74 percent 

(50 MGD All Waterbodies Option), 45 

percent (200 MGD All Waterbodies 

Option), and 16 percent (100 MGD for 

Certain Waterbodies Option), 

respectively, of total design intake flow 

potentially covered under Phase III, 

result in no closures, and affect only one 

small entity (a new offshore oil and gas 

facility). By providing five compliance 

alternatives, this proposal would offer 

Phase III existing facilities a high degree 

of flexibility in selecting the most costeffective approach to meeting section 

316(b) requirements. Under the 

proposal, these facilities would be able 

to demonstrate that existing flow or 

cooling water intake structure 

technologies fulfill section 316(b), by 

identifying impingement and 

entrainment design and control 

technologies, and/or use operational 

measures or restoration measures to 

fulfill the proposal’s requirements. The 

proposal would also ensure that any 

applicable requirements are 

economically practicable through the 

inclusion of the site-specific compliance 

alternative at § 125.103(a)(5). EPA 

further notes that the compliance 

alternative specified in § 125.103(a)(4) 

and 125.108(a) and (b) would be 

included in part to provide additional 

flexibility to Phase III existing facilities, 

as well as to reduce the burden of 

determining, implementing, and 

administering section 316(b) 

requirements among all relevant parties. 

Finally, the Agency believes that the 

three co-proposed options would extend 

additional flexibility to States by 

providing that where a State has 

adopted alternative regulatory 

requirements that achieve 

environmental performance comparable 

to that required under the rule, the 

Administrator would approve such 

alternative requirements.

2. Impact on Small Governments 

EPA has determined that this 

proposal would contain no regulatory 

requirements that might significantly or 

uniquely affect small governments. No 

government-owned facility would be 

subject to the national categorical 

requirements of the three co-proposed 

options. 

E. Executive Order 13132: Federalism 

Executive Order 13132 (64 FR 43255, 

August 10, 1999) requires EPA to 

develop an accountable process to 

ensure ‘‘meaningful and timely input by 

State and local officials in the 

development of regulatory policies that 

have federalism implications.’’ ‘‘Policies 

that have federalism implications’’ are 

defined in the Executive Order to 

include regulations that have 

‘‘substantial direct effects on the States, 

on the relationship between the national 

government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government.’’

Under section 6 of Executive Order 

13132, EPA may not issue a regulation 

that has federalism implications, that 

imposes substantial direct compliance 

costs, and that is not required by statute 

unless the Federal government provides 

the funds necessary to pay the direct 

compliance costs incurred by State and 

local governments or EPA consults with 

State and local officials early in the 

process of developing the proposed 

regulation. EPA also may not issue a 

regulation that has federalism 

implications and that preempts State 

law, unless the Agency consults with 

State and local officials early in the 

process of developing the proposed 

regulation. 

This proposed rule would not have 

federalism implications. It would not 

have substantial direct effects on the 

States, on the relationship between the 

Federal government and the States, or 

on the distribution of power and 

responsibilities among the various 

levels of government, as specified in 

Executive Order 13132. Rather, this 

proposed rule would result in minimal 

administrative costs to States that have 

an authorized NPDES program. Under 

the co-proposed 50 MGD All 

Waterbodies Option, EPA expects an 

annual burden of 16,972 hours with an 

annual cost of $6,823 (non-labor costs) 

for States to collectively administer this 

proposed rule. Under the co-proposed 

200 MGD All Waterbodies Option, EPA 

expects an annual burden of 4,677 hours 

with an annual cost of $2,160 (non-labor 

costs) for States to collectively 

administer this proposed rule. Under 

the co-proposed 100 MGD Certain 

Waterbodies Option, EPA expects an 

annual burden of 6,528 hours with an 

annual cost of $1,973 (non-labor costs) 

for States to collectively administer this 

proposed rule. It is noted that States do 

not incur any burden hours and nonlabor costs to administer the proposed 

rule for new offshore oil and gas 

extraction facilities since these facilities 

are outside of the jurisdiction of the 

States. EPA has identified zero Phase III 

existing facilities that are owned by 

federal, state or local government 

entities; therefore, the annual impacts 

on these facilities is zero. 

The proposed national cooling water 

intake structure requirements would be 

implemented through permits issued 

under the NPDES program. Forty-five 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68541

States and the Virgin Islands are 

currently authorized pursuant to section 

402(b) of the Clean Water Act to 

implement the NPDES program. In 

States not authorized to implement the 

NPDES program, EPA issues NPDES 

permits. Under the Clean Water Act, 

States are not required to become 

authorized to administer the NPDES 

program. Rather, such authorization is 

available to States if they operate their 

programs in a manner consistent with 

section 402(b) and applicable 

regulations. Generally, these provisions 

require that State NPDES programs 

include requirements that are as 

stringent as Federal program 

requirements. States retain the ability to 

implement requirements that are 

broader in scope or more stringent than 

Federal requirements. (See section 510 

of the Clean Water Act.) 

Today’s proposed rule would not 

have substantial direct effects on either 

authorized or nonauthorized States or 

on local governments because it would 

not change how EPA and the States and 

local governments interact or their 

respective authority or responsibilities 

for implementing the NPDES program. 

Today’s proposed rule would establish 

national requirements for Phase III 

facilities with cooling water intake 

structures. NPDES-authorized States 

that currently do not comply with the 

regulations based on today’s proposal 

might need to amend their regulations 

or statutes to ensure that their NPDES 

programs are consistent with Federal 

section 316(b) requirements. See 40 CFR 

123.62(e). For purposes of this proposed 

rule, the relationship and distribution of 

power and responsibilities between the 

Federal government and the States and 

local governments are established under 

the Clean Water Act (e.g., sections 

402(b) and 510); nothing in this 

proposed rule would alter that. Thus, 

the requirements of section 6 of the 

Executive Order do not apply to this 

rule. 

Although section 6 of Executive Order 

13132 does not apply to this rule, EPA 

did consult with State governments and 

representatives of local governments in 

developing the proposed rule. During 

the development of the proposed and 

final Phase I and Phase II section 316(b) 

rules, EPA conducted several outreach 

activities through which State and local 

officials were informed about this 

proposal and they provided information 

and comments to the Agency. The 

outreach activities were intended to 

provide EPA with feedback on issues 

such as adverse environmental impact, 

best technology available, and the 

potential cost associated with various 

regulatory alternatives. These outreach 

activities are discussed in section I.C of 

the preamble to today’s proposed rule. 

In the spirit of this Executive Order 

and consistent with EPA policy to 

promote communications between EPA 

and State and local governments, EPA 

specifically solicits comment on this 

proposed rule from State and local 

officials. 

F. E.O. 13175: Consultation and 

Coordination With Indian Tribal 

Governments 

Executive Order 13175, entitled 

‘‘Consultation and Coordination with 

Indian Tribal Governments’’ (65 FR 

67249, November 6, 2000), requires EPA 

to develop an accountable process to 

ensure ‘‘meaningful and timely input by 

tribal officials in the development of 

regulatory policies that have tribal 

implications.’’ ‘‘Policies that have tribal 

implications’’ is defined in the 

Executive Order to include regulations 

that have ‘‘substantial direct effects on 

one or more Indian Tribes, on the 

relationship between the Federal 

government and the Indian Tribes, or on 

the distribution of power and 

responsibilities between the Federal 

government and Indian Tribes.’’

This proposed rule would not have 

tribal implications. It would not have 

substantial direct effects on tribal 

governments, on the relationship 

between the Federal government and 

Indian Tribes, or on the distribution of 

power and responsibilities between the 

Federal government and Indian Tribes, 

as specified in Executive Order 13175. 

EPA’s analyses show that no facility 

subject to this proposed rule is owned 

by tribal governments. This proposed 

rule would not affect Tribes in any way 

in the foreseeable future. Accordingly, 

the requirements of Executive Order 

13175 do not apply to this rule. 

G. E.O. 13045: Protection of Children 

From Environmental Health Risks and 

Safety Risks 

Executive Order 13045 (62 FR 19885, 

April 23, 1997) applies to any rule that 

(1) is determined to be ‘‘economically 

significant’’ as defined under Executive 

Order 12866, and (2) concerns an 

environmental health or safety risk that 

EPA has reason to believe might have a 

disproportionate effect on children. If 

the regulatory action meets both criteria, 

the Agency must evaluate the 

environmental health and safety effects 

of the planned rule on children, and 

explain why the planned regulation is 

preferable to other potentially effective 

and reasonably feasible alternatives 

considered by the Agency. This 

proposed rule is not an economically 

significant rule as defined under 

Executive Order 12866 ($100 million 

threshold). Further, it does not concern 

an environmental health or safety risk 

that would have a disproportionate 

effect on children. Therefore, it is not 

subject to Executive Order 13045.

H. Executive Order 13211: Actions That 

Significantly Affect Energy Supply, 

Distribution, or Use 

This proposal is not a ‘‘significant 

energy action’’ as defined in Executive 

Order 13211, (‘‘Actions Concerning 

Regulations That Significantly Affect 

Energy Supply, Distribution, or Use’’ (66 

FR 28355, May 22, 2001)) because it is 

not likely to have a significant adverse 

effect on the supply, distribution, or use 

of energy. Based on our analysis (see 

section VIII), EPA has determined that 

the proposal contains no compliance 

requirements that would: 

• Reduce crude oil supply in excess 

of 10,000 barrels per day; 

• Reduce fuel production in excess of 

4,000 barrels per day; 

• Reduce coal production in excess of 

5 million tons per day; 

• Reduce electricity production in 

excess of 1 billion kilowatt hours per 

day or in excess of 500 megawatts of 

installed capacity; 

• Increase energy prices in excess of 

10 percent; 

• Increase the cost of energy 

distribution in excess of 10 percent; 

• Significantly increase dependence 

on foreign supplies of energy; or 

• Have other similar adverse 

outcomes, particularly unintended ones. 

EPA analyzed the potential for 

impacts of the three co-proposed 

options and the proposed rule for new 

offshore oil and gas extraction facilities 

and found that none of them would lead 

to adverse outcomes. From these 

analyses, EPA concludes that this 

proposal would have minimal energy 

effects at a national and regional level. 

As a result, EPA did not prepare a 

Statement of Energy Effects. For more 

detail on the potential energy effects of 

this proposal, see the ‘‘Economic 

Analysis for the Proposed Section 

316(b) Rule for Phase III Facilities’’

(DCN 7–0002). EPA requests comments 

on these determinations. 

I. National Technology Transfer and 

Advancement Act 

Section 12(d) of the National 

Technology Transfer and Advancement 

Act (NTTAA) of 1995, Public Law 104–

113, Sec. 12(d) directs EPA to use 

voluntary consensus standards in its 

regulatory activities unless to do so 

would be inconsistent with applicable 

law or otherwise impractical. Voluntary 

consensus standards are technical 

68542 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

standards (e.g., materials specifications, 

test methods, sampling procedures, and 

business practices) that are developed or 

adopted by voluntary consensus 

standard bodies. The NTTAA directs 

EPA to provide Congress, through the 

Office of Management and Budget 

(OMB), explanations when the Agency 

decides not to use available and 

applicable voluntary consensus 

standards. 

This proposed rule does not involve 

such technical standards. Therefore, 

EPA is not considering the use of any 

voluntary consensus standards. EPA 

welcomes comments on this aspect of 

the proposed rule and, specifically, 

invites the public to identify potentially 

applicable voluntary consensus 

standards and to explain why such 

standards should be used in this 

proposed rule. 

J. E.O. 12898: Federal Actions To 

Address Environmental Justice in 

Minority Populations and Low-Income 

Populations 

Executive Order 12898 requires that, 

to the greatest extent practicable and 

permitted by law, each Federal agency 

must make achieving environmental 

justice part of its mission. E.O. 12898 

provides that each Federal agency must 

conduct its programs, policies, and 

activities that substantially affect human 

health or the environment in a manner 

that ensures such programs, policies, 

and activities do not have the effect of 

excluding persons (including 

populations) from participation in, 

denying persons (including 

populations) the benefits of, or 

subjecting persons (including 

populations) to discrimination under 

such programs, policies, and activities 

because of their race, color, or national 

origin. 

Today’s proposed rule would require 

that the location, design, construction, 

and capacity of cooling water intake 

structures at Phase III existing facilities 

reflect the best technology available for 

minimizing adverse environmental 

impact. For several reasons, EPA does 

not expect that this proposed rule 

would have an exclusionary effect, deny 

persons the benefits of the participating 

in a program, or subject persons to 

discrimination because of their race, 

color, or national origin. 

To assess the impact of the rule on 

low-income and minority populations, 

EPA calculated the poverty rate and the 

percentage of the population classified 

as non-white for populations living 

within a 50-mile radius of each of the 

348 (unweighted) facilities in the Phase 

III universe. The results of the analysis, 

presented in the Economic Analysis, 

show that the populations affected by 

the in-scope facilities have poverty 

levels and racial compositions that are 

quite similar to the U.S. population as 

a whole. Based on these results, EPA 

does not believe that this rule would 

have an exclusionary effect, deny 

persons the benefits of the NPDES 

program, or subject persons to 

discrimination because of their race, 

color, or national origin. 

In fact, because EPA expects that this 

proposed rule would help to preserve 

the health of aquatic ecosystems located 

in reasonable proximity to Phase III 

existing facilities, it believes that all 

populations, including minority and 

low-income populations, would benefit 

from improved environmental 

conditions as a result of this rule. 

K. E.O. 13158: Marine Protected Areas 

Executive Order 13158 (65 FR 34909, 

May 31, 2000) requires EPA to 

‘‘expeditiously propose new sciencebased regulations, as necessary, to 

ensure appropriate levels of protection 

for the marine environment.’’ EPA may 

take action to enhance or expand 

protection of existing marine protected 

areas and to establish or recommend, as 

appropriate, new marine protected 

areas. The purpose of the Executive 

Order is to protect the significant 

natural and cultural resources within 

the marine environment, which means 

‘‘those areas of coastal and ocean 

waters, the Great Lakes and their 

connecting waters, and submerged lands 

thereunder, over which the United 

States exercises jurisdiction, consistent 

with international law.’’

This proposed rule recognizes the 

biological sensitivity of tidal rivers, 

estuaries, oceans, and the Great Lakes 

and their susceptibility to adverse 

environmental impact from cooling 

water intake structures. This proposal 

provides requirements for reducing both 

impingement and entrainment using 

technologies to minimize adverse 

environmental impact for cooling water 

intake structures located on these types 

of waterbodies. 

EPA expects that this proposed rule 

would reduce impingement and 

entrainment at Phase III existing 

facilities. The rule would afford 

protection of aquatic organisms at 

individual, population, community, or 

ecosystem levels of ecological 

structures. Therefore, EPA expects 

today’s proposed rule would advance 

the objective of the Executive Order to 

protect marine areas. 

L. Plain Language Directive 

Executive Order 12866 and the 

President’s memorandum of June 1, 

1998, require each agency to write all 

rules in plain language. We invite your 

comments on how to make this 

proposed rule easier to understand. For 

example: Have we organized the 

material to suit your needs? Are the 

requirements in the rule clearly stated? 

Does the rule contain technical language 

or jargon that is not clear? Would a 

different format (grouping and order of 

sections, use of headings, paragraphing) 

make the rule easier to understand? 

Would more (but shorter) sections be 

better? Could we improve clarity by 

adding tables, lists, or diagrams? What 

else could we do to make the rule easier 

to understand?

List of Subjects 

40 CFR Part 9 

Environmental protection, Reporting 

and recordkeeping requirements. 

40 CFR Part 122 

Environmental protection, 

Administrative practice and procedure, 

Confidential business information, 

Hazardous substances, Reporting and 

recordkeeping requirements, Water 

pollution control. 

40 CFR Part 123 

Environmental protection, 

Administrative practice and procedure, 

Confidential business information, 

Hazardous substances, Indians-lands, 

Intergovernmental relations, Penalties, 

Reporting and recordkeeping 

requirements, Water pollution control. 

40 CFR Part 124 

Environmental protection, 

Administrative practice and procedure, 

Air pollution control, Hazardous waste, 

Indians-lands, Reporting and 

recordkeeping requirements, Water 

pollution control, Water supply. 

40 CFR Part 125 

Environmental protection, Cooling 

water intake structure, Reporting and 

recordkeeping requirements, Waste 

treatment and disposal, Water pollution 

control.

Dated: November 1, 2004. 

Michael O. Leavitt, 

Administrator.

For the reasons set forth in the 

preamble, chapter I of title 40 of the 

Code of Federal Regulations is proposed 

to be amended as follows:

PART 9—OMB APPROVALS UNDER 

THE PAPERWORK REDUCTION ACT 

1. The authority citation for part 9 

continues to read as follows:

Authority: 7 U.S.C. 135 et seq., 136–136y; 

15 U.S.C. 2001, 2003, 2005, 2006, 2601–2671, 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68543

21 U.S.C. 331j, 346a, 348; 31 U.S.C. 9701; 33 

U.S.C. 1251 et seq., 1311, 1313d, 1314, 1318, 

1321, 1326, 1330, 1342, 1344, 1345 (d) and 

(e), 1361; E.O. 11735, 38 FR 21243, 3 CFR, 

1971–1975 Comp. p. 973; 42 U.S.C. 241, 

242b, 243, 246, 300f, 300g, 300g–1, 300g–2, 

300g–3, 300g–4, 300g–5, 300g–6, 300j–1, 

300j–2, 300j–3, 300j–4, 300j–9, 1857 et seq., 

6901–6992k, 7401–7671q, 7542, 9601–9657, 

11023, 11048.

2. In § 9.1 the table is amended by 

revising the entry for ‘‘122.21(r)’’ and by 

adding entries in numerical order under 

the indicated heading to read as follows:

§ 9.1 OMB approvals under the Paperwork 

Reduction Act.

* * * * *

40 CFR citation OMB Control No. 

* * * * * * * 

EPA Administered Permit Programs: The National Pollutant Discharge Elimination System

* * * * * * * 

122.21(r) .......................................................................................................................................................... 2040–0241, 2040–0257, xxxx–xxxx 

* * * * * * * 

Criteria and Standards for the National Pollutant Discharge Elimination System

* * * * * * * 

125.103 ............................................................................................................................................................ xxxx–xxxx 

125.104 ............................................................................................................................................................ xxxx–xxxx 

125.106 ............................................................................................................................................................ xxxx–xxxx 

125.107 ............................................................................................................................................................ xxxx–xxxx 

125.108 ............................................................................................................................................................ xxxx–xxxx 

* * * * * * * 

PART 122—EPA ADMINISTERED 

PERMIT PROGRAMS: THE NATIONAL 

POLLUTANT DISCHARGE 

ELIMINATION SYSTEM 

1. The authority citation for part 122 

continues to read as follows:

Authority: The Clean Water Act, 33 U.S.C. 

1251 et seq.

2. Section 122.21 is amended as 

follows: 

a. Revising paragraph (r)(1). 

b. Adding a new paragraph (r)(2)(iv). 

c. Revising paragraph (r)(4) 

introductory text. 

d. Revising paragraph (r)(5) 

introductory text.

§ 122.21 Application for a permit 

(applicable to State programs, see § 123.25)

* * * * *

(r) Application requirements for 

facilities with cooling water intake 

structures—(1)(i) New facilities with 

new or modified cooling water intake 

structures. New facilities (other than 

offshore oil and gas extraction facilities) 

with cooling water intake structures as 

defined in part 125, subpart I, of this 

chapter must submit to the Director for 

review the information required under 

paragraphs (r)(2) (except (r)(2)(iv)), (3), 

and (4) of this section and § 125.86 of 

this chapter as part of their application. 

New offshore oil and gas extraction 

facilities with cooling water intake 

structures as defined in part 125, 

subpart N, of this chapter that are fixed 

facilities must submit to the Director for 

review the information required under 

paragraphs (r)(2) (except (r)(2)(iv)), (3), 

and (4) of this section and § 125.136 of 

this chapter as part of their application. 

New offshore oil and gas extraction 

facilities that are not fixed facilities 

must submit to the Director for review 

only the information required under 

paragraphs (r)(2)(iv), (r)(3) (except 

(r)(3)(ii)), and § 125.136 of this chapter 

as part of their application. Requests for 

alternative requirements under § 125.85 

or § 125.135 of this chapter must be 

submitted with your permit application. 

(ii) Phase II existing facilities. Phase II 

existing facilities as defined in part 125, 

subpart J, of this chapter must submit to 

the Director for review the information 

required under paragraphs (r)(2) (except 

(r)(2)(iv)), (3), and (5) of this section and 

all applicable provisions of § 125.95 of 

this chapter as part of their application 

except for the Proposal for Information 

Collection which must be provided in 

accordance with § 125.95(b)(1). 

(iii) Phase III existing facilities. Phase 

III existing facilities as defined in part 

125, subpart K, of this chapter must 

submit to the Director for review the 

information required under paragraphs 

(r)(2) (except (r)(2)(iv)), (3), and (5) of 

this section and all applicable 

provisions of § 125.104 of this chapter 

as part of their application except for 

the Proposal for Information Collection 

which must be provided in accordance 

with § 125.104(b)(1) of this chapter. 

(2) * * * 

(iv) For new offshore oil and gas 

facilities that are not fixed facilities, a 

narrative description and/or locational 

maps providing information on 

predicted locations within the 

waterbody during the permit term in 

sufficient detail for the Director to 

determine the appropriateness of 

additional impingement requirements 

under § 125.134(b)(4) of this chapter.

* * * * *

(4) Source water baseline biological 

characterization data. This information 

is required to characterize the biological 

community in the vicinity of the cooling 

water intake structure and to 

characterize the operation of the cooling 

water intake structures. The Director 

may also use this information in 

subsequent permit renewal proceedings 

to determine if your Design and 

Construction Technology Plan as 

required in § 125.86(b)(4) or 

§ 125.136(b)(3) of this chapter should be 

revised. This supporting information 

must include existing data (if they are 

available). However, you may 

supplement the data using newly 

conducted field studies if you choose to 

do so. The information you submit must 

include:

* * * * *

(5) Cooling water system data. Phase 

II and III existing facilities as defined in 

part 125, subparts J and K, respectively, 

of this chapter must provide the 

68544 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

following information for each cooling 

water intake structure they use:

* * * * *

3. Section 122.44 is amended by 

revising paragraph (b)(3) to read as 

follows:

§ 122.44 Establishing limitations, 

standards, and other permit conditions 

(applicable to State NPDES programs, see 

§ 123.25).

* * * * *

(b) * * * 

(3) Requirements applicable to 

cooling water intake structures under 

section 316(b) of the CWA, in 

accordance with part 125, subparts I, J, 

K, and N of this chapter.

* * * * *

PART 123—STATE PROGRAM 

REQUIREMENTS 

1. The authority citation for part 123 

continues to read as follows:

Authority: Clean Water Act, 33 U.S.C. 1251 

et seq.

2. Section 123.25 is amended by 

revising paragraph (a)(36) to read as 

follows:

§ 123.25 Requirements for permitting. 

(a) * * * 

(36) Subparts A, B, D, H, I, J, K, and 

N of part 125 of this chapter;

* * * * *

PART 124—PROCEDURES FOR 

DECISIONMAKING 

1. The authority citation for part 124 

continues to read as follows:

Authority: Resource Conservation and 

Recovery Act, 42 U.S.C. 6901 et seq.; Safe 

Drinking Water Act, 42 U.S.C. 300f et seq.; 

Clean Water Act, 33 U.S.C. 1251 et seq.; 

Clean Air Act, 42 U.S.C. 7401 et seq.

2. Section 124.10 is amended by 

revising paragraph (d)(1)(ix) to read as 

follows:

§ 124.10 Public notice of permit actions 

and public comment period.

* * * * *

(d) * * * 

(1) * * * 

(ix) Requirements applicable to 

cooling water intake structures under 

section 316(b) of the CWA, in 

accordance with part 125, subparts I , J, 

K, and N of this chapter.

* * * * *

PART 125—CRITERIA AND 

STANDARDS FOR THE NATIONAL 

POLLUTANT DISCHARGE 

ELIMINATION SYSTEM 

1. The authority citation for part 125 

continues to read as follows:

Authority: Clean Water Act, 33 U.S.C. 1251 

et seq.; unless otherwise noted.

2. Add subpart K to part 125 to read 

as follows:

Subpart K—Requirements Applicable to 

Cooling Water Intake Structures for Phase 

III Existing Facilities Under Section 316(b) 

of the Act 

Sec. 

125.100 What are the purpose and scope of 

this subpart? 

125.101 What is a ‘‘Phase III existing 

facility’’? 

125.102 What special definitions apply to 

this subpart? 

125.103 How will requirements reflecting 

best technology available for minimizing 

adverse environmental impact be 

established for my Phase III existing 

facility? 

125.104 As an owner or operator of a Phase 

III existing facility, what must I collect 

and submit when I apply for my reissued 

NPDES permit? 

125.105 As an owner or operator of a Phase 

III existing facility, what monitoring 

must I perform? 

125.106 As an owner or operator of a Phase 

III existing facility, what records must I 

keep and what information must I 

report? 

125.107 As the Director, what must I do to 

comply with the requirements of this 

subpart? 

125.108 What are Approved Design and 

Construction Technologies?

Subpart K—Requirements Applicable 

to Cooling Water Intake Structures for 

Phase III Existing Facilities Under 

Section 316(b) of the Act

§ 125.100 What are the purpose and scope 

of this subpart? 

(a) This subpart establishes 

requirements that apply to the location, 

design, construction, and capacity of 

cooling water intake structures at 

existing facilities that are subject to this 

subpart (i.e., Phase III existing facilities). 

The purpose of these requirements is to 

establish the best technology available 

for minimizing adverse environmental 

impact associated with the use of 

cooling water intake structures. These 

requirements are implemented through 

National Pollutant Discharge 

Elimination System (NPDES) permits 

issued under section 402 of the Clean 

Water Act (CWA). 

(b) Existing facilities that are not 

subject to requirements under this or 

another subpart of this Part must meet 

requirements under section 316(b) of the 

CWA determined by the Director on a 

case-by-case, best professional judgment 

(BPJ) basis. 

(c) Alternative regulatory 

requirements. Notwithstanding any 

other provision of this subpart, if a State 

demonstrates to the Administrator that 

it has adopted alternative regulatory 

requirements in its NPDES program that 

will result in environmental 

performance within a watershed that is 

comparable to the reductions of 

impingement mortality and entrainment 

that would otherwise be achieved under 

§ 125.103, the Administrator must 

approve such alternative regulatory 

requirements. 

(d) Nothing in this subpart shall be 

construed to preclude or deny the right 

of any State or political subdivision of 

a State or any interstate agency under 

section 510 of the CWA to adopt or 

enforce any requirement with respect to 

control or abatement of pollution that is 

not less stringent than those required by 

Federal law.

§ 125.101 What is a ‘‘Phase III existing 

facility’’? 

OPTION A FOR PARAGRAPH (a)—

[This language reflects the regulatory 

option that defines a Phase III existing 

facility as one with design intake 

flows of 50 MGD or more, located on 

any waterbody type]:

(a) An existing facility, as defined in 

§ 125.102, is a Phase III existing facility 

subject to this subpart if it meets each 

of the following criteria:

(1) It is a point source; 

(2) It uses or proposes to use cooling 

water intake structures with a total 

design intake flow of 50 million gallons 

per day (MGD) or more to withdraw 

cooling water from waters of the United 

States; 

(3) It is an existing facility other than 

a Phase II existing facility as defined in 

§ 125.91 and § 125.93; and 

(4) It uses at least 25 percent of water 

withdrawn exclusively for cooling 

purposes, measured on an average 

annual basis.

OPTION B FOR PARAGRAPH (a)—

[This language reflects the regulatory 

option that defines a Phase III existing 

facility as one with design intake 

flows of 200 MGD or more, located on 

any waterbody type]:

(a) An existing facility, as defined in 

§ 125.102, is a Phase III existing facility 

subject to this subpart if it meets each 

of the following criteria: 

(1) It is a point source; 

(2) It uses or proposes to use cooling 

water intake structures with a total 

design intake flow of 200 million 

gallons per day (MGD) or more to 

withdraw cooling water from waters of 

the United States; 

(3) It is an existing facility other than 

a Phase II existing facility as defined in 

§ 125.91 and § 125.93; and 

(4) It uses at least 25 percent of water 

withdrawn exclusively for cooling 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68545

purposes, measured on an average 

annual basis.

OPTION C FOR PARAGRAPH (a)—

[This language reflects the regulatory 

option that defines a Phase III existing 

facility as one with design intake 

flows of 100 MGD or more, located on 

oceans, estuaries, tidal rivers, or one 

of the Great Lakes]:

(a) An existing facility, as defined in 

§ 125.102, is a Phase III existing facility 

subject to this subpart if it meets each 

of the following criteria: 

(1) It is a point source; 

(2) It uses or proposes to use cooling 

water intake structures with a total 

design intake flow of 100 million 

gallons per day (MGD) or more to 

withdraw cooling water from waters of 

the United States; 

(3) It withdraws cooling water from an 

ocean, estuary, tidal river, or one of the 

Great Lakes; 

(4) It is an existing facility other than 

a Phase II existing facility as defined in 

§ 125.91 and § 125.93; and 

(5) It uses at least 25 percent of water 

withdrawn exclusively for cooling 

purposes, measured on an average 

annual basis. 

(b) If an existing manufacturing 

facility is co-located with one or more 

existing facilities (that are not Phase II 

existing facilities as defined in § 125.91 

and § 125.93), each of the co-located 

facilities would be considered a Phase 

III existing facility if the combined total 

design intake flow of the co-located 

facilities is greater than the flow 

threshold established in paragraph (a)(2) 

of this section and each of the facilities 

meets the remaining applicability 

criteria in paragraph (a) of this section. 

(c) Use of a cooling water intake 

structure includes obtaining cooling 

water by any sort of contract or 

arrangement with one or more 

independent suppliers of cooling water 

if the supplier withdraws water from 

waters of the United States but is not 

itself a Phase II existing facility (as 

defined in § 125.91 and § 125.93) or 

Phase III existing facility, except as 

provided in paragraph (d) of this 

section. This provision is intended to 

prevent circumvention of these 

requirements by creating arrangements 

to receive cooling water from an entity 

that is not itself a Phase II or Phase III 

existing facility. 

(d) Notwithstanding paragraph (c) of 

this section, obtaining cooling water 

from a public water system or using 

treated effluent as cooling water at a 

Phase III existing facility does not 

constitute use of a cooling water intake 

structure for purposes of this subpart.

§ 125.102 What special definitions apply to 

this subpart? 

In addition to the definitions 

provided in § 122.3 of this chapter, the 

following special definitions apply to 

this subpart: 

Adaptive management method is a 

type of project management method 

where a facility chooses an approach to 

meeting the project goal, monitors the 

effectiveness of that approach, and then 

based on monitoring and any other 

relevant information, makes any 

adjustments necessary to ensure 

continued progress toward the project’s 

goal. This cycle of activity is repeated as 

necessary to reach the project’s goal. 

All life stages means eggs, larvae, 

juveniles, and adults. 

Annual mean flow means the average 

of daily flows over a calendar year. 

Calculation baseline means an 

estimate of impingement mortality and 

entrainment that would occur at your 

site assuming that: the cooling water 

system has been designed as a oncethrough system; the opening of the 

cooling water intake structure is located 

at, and the face of the standard 3/8-inch 

mesh traveling screen is oriented 

parallel to, the shoreline near the 

surface of the source waterbody; and the 

baseline practices, procedures, and 

structural configuration are those that 

your facility would maintain in the 

absence of any structural or operational 

controls, including flow or velocity 

reductions, implemented in whole or in 

part for the purposes of reducing 

impingement mortality and 

entrainment. You may also choose to 

use the current level of impingement 

mortality and entrainment as the 

calculation baseline. The calculation 

baseline may be estimated using: 

historical impingement mortality and 

entrainment data from your facility or 

from another facility with comparable 

design, operational, and environmental 

conditions; current biological data 

collected in the waterbody in the 

vicinity of your cooling water intake 

structure; or current impingement 

mortality and entrainment data 

collected at your facility. You may 

request that the calculation baseline be 

modified to be based on a location of the 

opening of the cooling water intake 

structure at a depth other than at or near 

the surface if you can demonstrate to the 

Director that the other depth would 

correspond to a higher baseline level of 

impingement mortality and/or 

entrainment. 

Closed-cycle recirculating system

means a system designed, using 

minimized make-up and blowdown 

flows, to withdraw water from a natural 

or other water source to support contact 

and/or noncontact cooling uses within a 

facility. The water is usually sent to a 

cooling canal or channel, lake, pond, or 

tower to allow waste heat to be 

dissipated to the atmosphere and then is 

returned to the system. (Some facilities 

divert the waste heat to other process 

operations.) New source water (make-up 

water) is added to the system to 

replenish losses that have occurred due 

to blowdown, drift, and evaporation. 

Cooling water means water used for 

contact or noncontact cooling, including 

water used for equipment cooling, 

evaporative cooling tower makeup, and 

dilution of effluent heat content. The 

intended use of the cooling water is to 

absorb waste heat rejected from the 

process or processes used, or from 

auxiliary operations on the facility’s 

premises. Cooling water that is used in 

a manufacturing process either before or 

after it is used for cooling is considered 

process water for the purposes of 

calculating the percentage of a facility’s 

intake flow that is used for cooling 

purposes in § 125.101(a)(4). 

Cooling water intake structure means 

the total physical structure and any 

associated constructed waterways used 

to withdraw cooling water from waters 

of the U.S. The cooling water intake 

structure extends from the point at 

which water is withdrawn from the 

surface water source up to, and 

including, the intake pumps. 

Design and construction technology

means any physical configuration of the 

cooling water intake structure, or a 

technology that is placed in the water 

body in front of the cooling water intake 

structure, to reduce impingement 

mortality and/or entrainment. Design 

and construction technologies include, 

but are not limited to, location of the 

intake structure, intake screen systems, 

passive intake systems, fish diversion 

and/or avoidance systems, and fish 

handling and return systems. 

Restoration measures are not design and 

construction technologies for purposes 

of this definition.

Design intake flow means the value 

assigned (during the cooling water 

intake structure design) to the total 

volume of water withdrawn from a 

source waterbody over a specific time 

period. 

Design intake velocity means the 

value assigned (during the design of a 

cooling water intake structure) to the 

average speed at which intake water 

passes through the open area of the 

intake screen (or other device) against 

which organisms might be impinged or 

through which they might be entrained. 

Diel means daily and refers to 

variation in organism abundance and 

density over a 24-hour period due to the 

68546 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

influence of water movement, physical 

or chemical changes, and changes in 

light intensity. 

Entrainment means the incorporation 

of any life stages of fish and shellfish 

with intake water flow entering and 

passing through a cooling water intake 

structure and into a cooling water 

system. 

Estuary means a semi-enclosed body 

of water that has a free connection with 

open seas and within which the 

seawater is measurably diluted with 

fresh water derived from land drainage. 

The salinity of an estuary exceeds 0.5 

parts per thousand (by mass) but is 

typically less than 30 parts per thousand 

(by mass). 

Existing facility means any facility 

that commenced construction as 

described in 40 CFR 122.29(b)(4) on or 

before January 17, 2002 (or [60 days 

from publication of the final rule] for an 

offshore oil and gas extraction facility); 

and any modification of, or any addition 

of a unit at such a facility that does not 

meet the definition of a new facility at 

§ 125.83. 

Freshwater river or stream means a 

lotic (free-flowing) system that does not 

receive significant inflows of water from 

oceans or bays due to tidal action. For 

the purposes of this rule, a flow-through 

reservoir with a retention time of 7 days 

or less will be considered a freshwater 

river or stream. 

Impingement means the entrapment 

of any life stages of fish and shellfish on 

the outer part of an intake structure or 

against a screening device during 

periods of intake water withdrawal. 

Lake or reservoir means any inland 

body of open water with some 

minimum surface area free of rooted 

vegetation and with an average 

hydraulic retention time of more than 7 

days. Lakes or reservoirs might be 

natural water bodies or impounded 

streams, usually fresh, surrounded by 

land or by land and a man-made 

retainer (e.g., a dam). Lakes or reservoirs 

might be fed by rivers, streams, springs, 

and/or local precipitation. 

Moribund means dying; close to 

death. 

Natural thermal stratification means 

the naturally occurring and/or existing 

division of a waterbody into horizontal 

layers of differing densities as a result 

of variations in temperature at different 

depths. 

Ocean means marine open coastal 

waters with a salinity greater than or 

equal to 30 parts per thousand (by 

mass). 

Once-through cooling water system

means a system designed to withdraw 

water from a natural or other water 

source, use it at the facility to support 

contact and/or noncontact cooling uses, 

and then discharge it to a waterbody 

without recirculation. Once-through 

cooling systems sometimes employ 

canals/channels, ponds, or nonrecirculating cooling towers to dissipate 

waste heat from the water before it is 

discharged. 

Operational measure means a 

modification to any operation at a 

facility that serves to minimize impact 

to fish and shellfish from the cooling 

water intake structure. Examples of 

operational measures include, but are 

not limited to: reductions in cooling 

water intake flow through the use of 

variable speed pumps and seasonal flow 

reductions or shutdowns; and more 

frequent rotation of traveling screens. 

Source water means the waters of the 

U.S. from which the cooling water is 

withdrawn. 

Supplier means an entity, other than 

the regulated facility, that owns and 

operates its own cooling water intake 

structure and directly withdraws water 

from waters of the United States. The 

supplier sells the cooling water to other 

facilities for their use, but may also use 

a portion of the water itself. An entity 

that provides potable water to 

residential populations (e.g., public 

water system) is not a supplier for 

purposes of this subpart. 

Thermocline means the middle layer 

of a thermally stratified lake or a 

reservoir. In this layer, there is a rapid 

change in temperatures between the top 

and bottom of the layer. 

Tidal river means the most seaward 

reach of a river or stream where the 

salinity is typically less than or equal to 

0.5 parts per thousand (by mass) at a 

time of annual low flow and whose 

surface elevation responds to the effects 

of coastal lunar tides.

§ 125.103 How will requirements reflecting 

best technology available for minimizing 

adverse environmental impact be 

established for my Phase III existing 

facility? 

(a) Compliance Alternatives. You 

must select and implement one of the 

following five alternatives for 

establishing best technology available 

for minimizing adverse environmental 

impact at your facility: 

(1)(i) You may demonstrate to the 

Director that you have reduced, or will 

reduce, your flow commensurate with a 

closed-cycle recirculating system. In 

this case, you are deemed to have met 

the applicable performance standards 

and will not be required to demonstrate 

further that your facility meets the 

impingement mortality and entrainment 

performance standards specified in 

paragraph (b) of this section. In 

addition, you are not subject to the 

requirements in §§ 125.104, 125.105, 

125.106, or 125.107. However, you may 

still be subject to any more stringent 

requirements established under 

paragraph (e) of this section; or 

(ii) You may demonstrate to the 

Director that you have reduced, or will 

reduce, your maximum through-screen 

design intake velocity to 0.5 ft/s or less. 

In this case, you are deemed to have met 

the impingement mortality performance 

standards and will not be required to 

demonstrate further that your facility 

meets the performance standards for 

impingement mortality specified in 

paragraph (b) of this section and you are 

not subject to the requirements in 

§§ 125.104, 125.105, 125.106, or 125.107 

as they apply to impingement mortality. 

However, you are still subject to any 

applicable requirements for entrainment 

reduction and may still be subject to any 

more stringent requirements established 

under paragraph (e) of this section. 

(2) You may demonstrate to the 

Director that your existing design and 

construction technologies, operational 

measures, and/or restoration measures 

meet the performance standards 

specified in paragraph (b) of this section 

and/or the restoration requirements in 

paragraph (c) of this section; 

(3) You may demonstrate to the 

Director that you have selected, and will 

install and properly operate and 

maintain, design and construction 

technologies, operational measures, 

and/or restoration measures that will, in 

combination with any existing design 

and construction technologies, 

operational measures, and/or restoration 

measures, meet the performance 

standards specified in paragraph (b) of 

this section and/or the restoration 

requirements in paragraph (c) of this 

section; 

(4) You may demonstrate to the 

Director that you have installed, or will 

install, and properly operate and 

maintain an approved design and 

construction technology in accordance 

with § 125.108(a) or (b); or 

(5) You may demonstrate to the 

Director that you have selected, 

installed, and are properly operating 

and maintaining, or will install and 

properly operate and maintain design 

and construction technologies, 

operational measures, and/or restoration 

measures that the Director has 

determined to be the best technology 

available to minimize adverse 

environmental impact for your facility 

in accordance with paragraphs (a)(5)(i) 

or (a)(5)(ii) of this section.

(i) If the Director determines that data 

specific to your facility demonstrate that 

the costs of compliance under 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68547

alternatives in paragraphs (a)(2) through 

(4) of this section would be significantly 

greater than the costs considered by the 

Administrator for a facility like yours in 

establishing the applicable performance 

standards in paragraph (b) of this 

section, the Director must make a sitespecific determination of the best 

technology available for minimizing 

adverse environmental impact. This 

determination must be based on 

reliable, scientifically valid cost and 

performance data submitted by you and 

any other information that the Director 

deems appropriate. The Director must 

establish site-specific alternative 

requirements based on new and/or 

existing design and construction 

technologies, operational measures, 

and/or restoration measures that achieve 

an efficacy that is, in the judgment of 

the Director, as close as practicable to 

the applicable performance standards in 

paragraph (b) of this section, without 

resulting in costs that are significantly 

greater than the costs considered by the 

Administrator for a facility like yours in 

establishing the applicable performance 

standards. The Director’s site-specific 

determination may conclude that design 

and construction technologies, 

operational measures, and/or restoration 

measures in addition to those already in 

place are not justified because of the 

significantly greater costs. To calculate 

the costs considered by the 

Administrator for a facility like yours in 

establishing the applicable performance 

standards you must: 

(A) Determine which technology the 

Administrator modeled as the most 

appropriate compliance technology for 

your facility; 

(B) Using the Administrator’s costing 

equations, calculate the annualized 

capital and net operation and 

maintenance (O&M) costs for a facility 

with your design intake flow using this 

technology; 

(C) Determine the annualized net 

revenue loss associated with net 

construction downtime that the 

Administrator modeled for your facility 

to install this technology; 

(D) Determine the annualized pilot 

study costs that the Administrator 

modeled for your facility to test and 

optimize this technology; 

(E) Sum the cost items in paragraphs 

(a)(5)(i)(B), (a)(5)(i)(C), and (a)(5)(i)(D) of 

this section; and 

(F) Determine if the performance 

standards that form the basis of these 

estimates (i.e., impingement mortality 

reduction only or impingement 

mortality and entrainment reduction) 

are applicable to your facility, and if 

necessary, adjust the estimates to 

correspond to the applicable 

performance standards. 

(ii) If the Director determines that data 

specific to your facility demonstrate that 

the costs of compliance under 

alternatives in paragraphs (a)(2) through 

(4) of this section would be significantly 

greater than the benefits of complying 

with the applicable performance 

standards at your facility, the Director 

must make a site-specific determination 

of best technology available for 

minimizing adverse environmental 

impact. This determination must be 

based on reliable, scientifically valid 

cost and performance data submitted by 

you and any other information the 

Director deems appropriate. The 

Director must establish site-specific 

alternative requirements based on new 

and/or existing design and construction 

technologies, operational measures, 

and/or restoration measures that achieve 

an efficacy that, in the judgment of the 

Director, is as close as practicable to the 

applicable performance standards in 

paragraph (b) of this section without 

resulting in costs that are significantly 

greater than the benefits at your facility. 

The Director’s site-specific 

determination may conclude that design 

and construction technologies, 

operational measures, and/or restoration 

measures in addition to those already in 

place are not justified because the costs 

would be significantly greater than the 

benefits at your facility.

OPTION A FOR PARAGRAPH (b)—

[This language reflects the regulatory 

option that defines a Phase III existing 

facility as one with design intake 

flows of 50 MGD or more, located on 

any waterbody type or the regulatory 

option that defines a Phase III existing 

facility as one with design intake 

flows 200 MGD or more, located on 

any waterbody type]:

(b) National Performance Standards—

(1) Impingement Mortality Performance 

Standards. If you choose compliance 

alternatives in paragraphs (a)(2), (a)(3), 

or (a)(4) of this section, you must reduce 

impingement mortality for all life stages 

of fish and shellfish by 80 to 95 percent 

from the calculation baseline. 

(2) Entrainment Performance 

Standards. If you choose compliance 

alternatives in paragraphs (a)(1)(ii), 

(a)(2), (a)(3), or (a)(4) of this section, you 

must also reduce entrainment of all life 

stages of fish and shellfish by 60 to 90 

percent from the calculation baseline if: 

(i) Your facility is a Phase III existing 

facility; and 

(ii)(A) Your facility uses cooling water 

withdrawn from a tidal river, estuary, 

ocean, or one of the Great Lakes; or 

(B) Your facility uses cooling water 

withdrawn from a freshwater river or 

stream and the design intake flow of 

your cooling water intake structures is 

greater than five percent of the mean 

annual flow. 

(3) Additional Performance Standards 

for Facilities Withdrawing from a Lake 

(Other Than One of the Great Lakes) or 

a Reservoir. If your facility withdraws 

cooling water from a lake (other than 

one of the Great Lakes) or a reservoir 

and you propose to increase the design 

intake flow of cooling water intake 

structures it uses, your increased design 

intake flow must not disrupt the natural 

thermal stratification or turnover pattern 

(where present) of the source water, 

except in cases where the disruption 

does not adversely affect the 

management of fisheries. In determining 

whether any such disruption does not 

adversely affect the management of 

fisheries, you must consult with 

Federal, State, or Tribal fish and 

wildlife management agencies. 

(4) Use of Performance Standards for 

Site-Specific Determinations of Best 

Technology Available. The performance 

standards in paragraphs (b)(1) and (2) of 

this section must also be used for 

determining eligibility for site-specific 

determinations of best technology 

available for minimizing adverse 

environmental impact and establishing 

site-specific requirements that achieve 

an efficacy as close as practicable to the 

applicable performance standards 

without resulting in costs that are 

significantly greater than those 

considered by the Administrator for a 

facility like yours in establishing the 

performance standards or costs that are 

significantly greater than the benefits at 

your facility, pursuant to paragraph 

(a)(5) of this section.

OPTION B FOR PARAGRAPH (b)—

[This language reflects the regulatory 

option that defines a Phase III existing 

facility as one with design intake 

flows of 100 MGD or more, located on 

oceans, estuaries, tidal rivers, or one 

of the Great Lakes]:

(b) National Performance Standards—

(1) Impingement Mortality Performance 

Standards. If you choose compliance 

alternatives in paragraphs (a)(2), (a)(3), 

or (a)(4) of this section, you must reduce 

impingement mortality for all life stages 

of fish and shellfish by 80 to 95 percent 

from the calculation baseline. 

(2) Entrainment Performance 

Standards. If you choose compliance 

alternatives in paragraphs (a)(1)(ii), 

(a)(2), (a)(3), or (a)(4) of this section, you 

must also reduce entrainment of all life 

stages of fish and shellfish by 60 to 90 

percent from the calculation baseline. 

68548 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

(3) Use of Performance Standards for 

Site-Specific Determinations of Best 

Technology Available. The performance 

standards in paragraphs (b)(1) and (2) of 

this section must also be used for 

determining eligibility for site-specific 

determinations of best technology 

available for minimizing adverse 

environmental impact and establishing 

site specific requirements that achieve 

an efficacy as close as practicable to the 

applicable performance standards 

without resulting in costs that are 

significantly greater than those 

considered by the Administrator for a 

facility like yours in establishing the 

performance standards or costs that are 

significantly greater than the benefits at 

your facility, pursuant to paragraph 

(a)(5) of this section. 

(c) Requirements for Restoration 

Measures. With the approval of the 

Director, you may implement and 

adaptively manage restoration measures 

that produce and result in increases of 

fish and shellfish in your facility’s 

watershed in place of or as a 

supplement to installing design and 

control technologies and/or adopting 

operational measures that reduce 

impingement mortality and 

entrainment. You must demonstrate to 

the Director that: 

(1) You have evaluated the use of 

design and construction technologies 

and operational measures for your 

facility and determined that the use of 

restoration measures is appropriate 

because meeting the applicable 

performance standards or site-specific 

requirements through the use of design 

and construction technologies and/or 

operational measures alone is less 

feasible, less cost-effective, or less 

environmentally desirable than meeting 

the standards or requirements in whole 

or in part through the use of restoration 

measures; and 

(2) The restoration measures you will 

implement, alone or in combination 

with design and construction 

technologies and/or operational 

measures, will produce ecological 

benefits (fish and shellfish), including 

maintenance or protection of 

community structure and function in 

your facility’s waterbody or watershed, 

at a level that is substantially similar to 

the level you would achieve by meeting 

the applicable performance standards 

under paragraph (b) of this section, or 

that satisfies alternative site-specific 

requirements established pursuant to 

paragraph (a)(5) of this section.

(d)(1) Compliance Using a Technology 

Installation and Operation Plan or 

Restoration Plan. If you choose one of 

the compliance alternatives in 

paragraphs (a)(2), (3), (4), or (5) of this 

section, you may request that 

compliance with the requirements of 

paragraphs (a)(5) and (b) of this section 

during the first permit containing 

requirements consistent with this 

subpart be determined based on 

whether you have complied with the 

construction, operational, maintenance, 

monitoring, and adaptive management 

requirements of a Technology 

Installation and Operation Plan 

developed in accordance with 

§ 125.104(b)(4)(ii) (for any design and 

construction technologies and/or 

operational measures) and/or a 

Restoration Plan developed in 

accordance with § 125.104(b)(5) (for any 

restoration measures). The Technology 

Installation and Operation Plan must be 

designed to meet applicable 

performance standards in paragraph (b) 

of this section or alternative site-specific 

requirements developed pursuant to 

paragraph (a)(5) of this section. The 

Restoration Plan must be designed to 

achieve compliance with the applicable 

requirements in paragraph (c) of this 

section. 

(2) During subsequent permit terms, if 

you selected and installed design and 

construction technologies and/or 

operational measures and have been in 

compliance with the construction, 

operational, maintenance, monitoring, 

and adaptive management requirements 

of your Technology Installation and 

Operation Plan during the preceding 

permit term, you may request that 

compliance with the requirements of 

this section during the following permit 

term be determined based on whether 

you remain in compliance with your 

Technology Installation and Operation 

Plan, revised in accordance with your 

adaptive management plan in 

§ 125.104(b)(4)(ii)(C) if applicable 

performance standards are not being 

met. Each request and approval of a 

Technology Installation and Operation 

Plan shall be limited to one permit term. 

(3) During subsequent permit terms, if 

you selected and installed restoration 

measures and have been in compliance 

with the construction, operational, 

maintenance, monitoring, and adaptive 

management requirements in your 

Restoration Plan during the preceding 

permit term, you may request that 

compliance with the requirements of 

this section during the following permit 

term be determined based on whether 

you remain in compliance with your 

Restoration Plan, revised in accordance 

with your adaptive management plan in 

§ 125.104(b)(5)(v) if applicable 

performance standards are not being 

met. Each request and approval of a 

Restoration Plan shall be limited to one 

permit term. 

(e) More Stringent Standards. The 

Director may establish more stringent 

requirements as best technology 

available for minimizing adverse 

environmental impact if the Director 

determines that your compliance with 

the applicable requirements of this 

section would not meet the 

requirements of applicable State and 

Tribal law, or other Federal law.

§ 125.104 As an owner or operator of a 

Phase III existing facility, what must I 

collect and submit when I apply for my 

reissued NPDES permit? 

(a)(1) You must submit to the Director 

the Proposal for Information Collection 

required in paragraph (b)(1) of this 

section prior to the start of information 

collection activities; 

(2) You must submit to the Director 

the information required in 40 CFR 

122.21(r)(2) (except (r)(2)(iv)), (r)(3) and 

(r)(5) and any applicable portions of the 

Comprehensive Demonstration Study 

(Study), except for the Proposal for 

Information Collection required by 

paragraph (b)(1) of this section; and 

(i) You must submit your NPDES 

permit application in accordance with 

the time frames specified in 40 CFR 

122.21(d)(2). 

(ii) If you are a Phase III existing 

facility and your existing permit expires 

before [4 years from publication of the 

final rule], you may request that the 

Director establish a schedule for you to 

submit the information required by this 

section as expeditiously as practicable, 

but not later than [3 years and 180 days 

from publication of the final rule]. 

Between the time your existing permit 

expires and the time an NPDES permit 

containing requirements consistent with 

this subpart is issued to your facility, 

the best technology available to 

minimize adverse environmental impact 

will continue to be determined based on 

the Director’s best professional 

judgment. 

(3) In subsequent permit terms, the 

Director may approve a request to 

reduce the information required to be 

submitted in your permit application on 

the cooling water intake structure(s) and 

the source waterbody, if conditions at 

your facility and in the waterbody 

remain substantially unchanged since 

your previous application. You must 

submit your request for reduced cooling 

water intake structure and waterbody 

application information to the Director 

at least one year prior to the expiration 

of the permit. Your request must 

identify each required information item 

in 40 CFR 122.21(r) and this section that 

you determine has not substantially 

changed since the previous permit 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68549

application and the basis for your 

determination.

OPTION A FOR PARAGRAPH (b)—

[This language reflects the regulatory 

option that defines a Phase III existing 

facility as one with design intake 

flows of 50 MGD or more, located on 

any waterbody type or the regulatory 

option that defines a Phase III existing 

facility as one with design intake 

flows 200 MGD or more, located on 

any waterbody type]:

(b) Comprehensive Demonstration 

Study The purpose of the 

Comprehensive Demonstration Study 

(Study) is to characterize impingement 

mortality and entrainment, to describe 

the operation of your cooling water 

intake structures, and to confirm that 

the technologies, operational measures, 

and/or restoration measures you have 

selected and installed, or will install, at 

your facility meet the applicable 

requirements of § 125.103. All facilities 

except those that have met the 

applicable requirements in accordance 

with §§ 125.103(a)(1)(i), 

125.103(a)(1)(ii), and 125.103(a)(4) must 

submit all applicable portions of the 

Comprehensive Demonstration Study to 

the Director in accordance with 

paragraph (a) of this section. Facilities 

that meet the requirements in 

§ 125.103(a)(1)(i) by reducing their flow 

commensurate with a closed-cycle, 

recirculating system are not required to 

submit a Comprehensive Demonstration 

Study. Facilities that meet the 

requirements in § 125.103(a)(1)(ii) by 

reducing their design intake velocity to 

0.5 ft/sec or less are required to submit 

a Study only for the entrainment 

requirements, if applicable. Facilities 

that meet the requirements in 

§ 125.103(a)(4) and have installed and 

properly operate and maintain an 

approved design and construction 

technology (in accordance with 

§ 125.108) are required to submit only 

the Technology Installation and 

Operation Plan in paragraph (b)(4) of 

this section and the Verification 

Monitoring Plan in paragraph (b)(7) of 

this section. Facilities that are required 

to meet only impingement mortality 

performance standards in 

§ 125.103(b)(1) are required to submit 

only a Study for the impingement 

mortality reduction requirements. The 

Comprehensive Demonstration Study 

must include: 

(1) Proposal For Information 

Collection. You must submit to the 

Director for review and comment a 

description of the information you will 

use to support your Study. The Proposal 

for Information Collection must be 

submitted prior to the start of 

information collection activities, but 

you may initiate such activities prior to 

receiving comment from the Director. 

The proposal must include: 

(i) A description of the proposed and/

or implemented technologies, 

operational measures, and/or restoration 

measures to be evaluated in the Study; 

(ii) A list and description of any 

historical studies characterizing 

impingement mortality and entrainment 

and/or the physical and biological 

conditions in the vicinity of the cooling 

water intake structures and their 

relevance to this proposed Study. If you 

propose to use existing data, you must 

demonstrate the extent to which the 

data are representative of current 

conditions and that the data were 

collected using appropriate quality 

assurance/quality control procedures;

(iii) A summary of any past or 

ongoing consultations with appropriate 

Federal, State, and Tribal fish and 

wildlife agencies that are relevant to this 

Study and a copy of written comments 

received as a result of such 

consultations; and 

(iv) A sampling plan for any new field 

studies you propose to conduct in order 

to ensure that you have sufficient data 

to develop a scientifically valid estimate 

of impingement mortality and 

entrainment at your site. The sampling 

plan must document all methods and 

quality assurance/quality control 

procedures for sampling and data 

analysis. The sampling and data 

analysis methods you propose must be 

appropriate for a quantitative survey 

and include consideration of the 

methods used in other studies 

performed in the source waterbody. The 

sampling plan must include a 

description of the study area (including 

the area of influence of the cooling 

water intake structure(s)), and provide a 

taxonomic identification of the sampled 

or evaluated biological assemblages 

(including all life stages of fish and 

shellfish). 

(2) Source Waterbody Flow 

Information. You must submit to the 

Director the following source waterbody 

flow information: 

(i) If your cooling water intake 

structure is located in a freshwater river 

or stream, you must provide the annual 

mean flow of the waterbody and any 

supporting documentation and 

engineering calculations to support your 

analysis of whether your design intake 

flow is greater than five percent of the 

mean annual flow of the river or stream 

for purposes of determining applicable 

performance standards under 

§ 125.103(b). Representative historical 

data (from a period of time up to 10 

years, if available) must be used; and 

(ii) If your cooling water intake 

structure is located in a lake (other than 

one of the Great Lakes) or a reservoir 

and you propose to increase its design 

intake flow, you must provide a 

description of the thermal stratification 

in the waterbody, and any supporting 

documentation and engineering 

calculations to show that the total 

design intake flow after the increase will 

not disrupt the natural thermal 

stratification and turnover pattern in a 

way that adversely impacts fisheries, 

including the results of any 

consultations with Federal, State, or 

Tribal fish and wildlife management 

agencies. 

(3) Impingement Mortality and/or 

Entrainment Characterization Study.

You must submit to the Director an 

Impingement Mortality and/or 

Entrainment Characterization Study 

whose purpose is to provide 

information to support the development 

of a calculation baseline for evaluating 

impingement mortality and entrainment 

and to characterize current 

impingement mortality and 

entrainment. The Impingement 

Mortality and/or Entrainment 

Characterization Study must include the 

following, in sufficient detail to support 

development of the other elements of 

the Comprehensive Demonstration 

Study: 

(i) Taxonomic identifications of all 

life stages of fish, shellfish, and any 

species protected under Federal, State, 

or Tribal Law (including threatened or 

endangered species) that are in the 

vicinity of the cooling water intake 

structure(s) and are susceptible to 

impingement and entrainment; 

(ii) A characterization of all life stages 

of fish, shellfish, and any species 

protected under Federal, State, or Tribal 

Law (including threatened or 

endangered species) identified pursuant 

to paragraph (b)(3)(i) of this section, 

including a description of the 

abundance and temporal and spatial 

characteristics in the vicinity of the 

cooling water intake structure(s), based 

on sufficient data to characterize 

annual, seasonal, and diel variations in 

impingement mortality and entrainment 

(e.g., related to climate and weather 

differences, spawning, feeding and 

water column migration). These may 

include historical data that are 

representative of the current operation 

of your facility and of biological 

conditions at the site; 

(iii) Documentation of the current 

impingement mortality and entrainment 

of all life stages of fish, shellfish, and 

any species protected under Federal, 

State, or Tribal Law (including 

threatened or endangered species) 

68550 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

identified pursuant to paragraph (b)(3)(i) 

of this section and an estimate of 

impingement mortality and entrainment 

to be used as the calculation baseline. 

The documentation may include 

historical data that are representative of 

the current operation of your facility 

and of biological conditions at the site. 

Impingement mortality and entrainment 

samples to support the calculations 

required in paragraphs (b)(4)(i)(C) and 

(b)(5)(iii) of this section must be 

collected during periods of 

representative operational flows for the 

cooling water intake structure and the 

flows associated with the samples must 

be documented; 

(4) Technology and Compliance 

Assessment Information—(i) Design and 

Construction Technology Plan. If you 

choose to use design and construction 

technologies and/or operational 

measures, in whole or in part to meet 

the requirements of § 125.103(a)(2) or 

(3), you must submit a Design and 

Construction Technology Plan to the 

Director for review and approval. The 

plan must explain the technologies and/

or operational measures you have in 

place and/or have selected to meet the 

requirements in § 125.103. (Examples of 

potentially appropriate technologies 

may include, but are not limited to, 

wedgewire screens, fine mesh screens, 

fish handling and return systems, 

barrier nets, aquatic filter barrier 

systems, vertical and/or lateral 

relocation of the cooling water intake 

structure, and enlargement of the 

cooling water intake structure opening 

to reduce velocity. Examples of 

potentially appropriate operational 

measures may include, but are not 

limited to, seasonal shutdowns, 

reductions in flow, and continuous or 

more frequent rotation of traveling 

screens.) The plan must contain the 

following information: 

(A) A narrative description of the 

design and operation of all design and 

construction technologies and/or 

operational measures (existing and 

proposed), including fish handling and 

return systems, that you have in place 

or will use to meet the requirements to 

reduce impingement mortality of those 

species expected to be most susceptible 

to impingement, and information that 

demonstrates the efficacy of the 

technologies and/or operational 

measures for those species; 

(B) A narrative description of the 

design and operation of all design and 

construction technologies and/or 

operational measures (existing and 

proposed) that you have in place or will 

use to meet the requirements to reduce 

entrainment of those species expected to 

be the most susceptible to entrainment, 

if applicable, and information that 

demonstrates the efficacy of the 

technologies and/or operational 

measures for those species; 

(C) Calculations of the reduction in 

impingement mortality and entrainment 

of all life stages of fish and shellfish that 

would be achieved by the technologies 

and/or operational measures you have 

selected based on the Impingement 

Mortality and/or Entrainment 

Characterization Study in paragraph 

(b)(3) of this section. In determining 

compliance with any requirements to 

reduce impingement mortality or 

entrainment, you must assess the total 

reduction in impingement mortality and 

entrainment against the calculation 

baseline determined in accordance with 

paragraph (b)(3) of this section. 

Reductions in impingement mortality 

and entrainment from this calculation 

baseline as a result of any design and 

construction technologies and/or 

operational measures already 

implemented at your facility should be 

added to the reductions expected to be 

achieved by any additional design and/

or construction technologies and 

operational measures that will be 

implemented, and any increases in fish 

and shellfish within the waterbody 

attributable to your restoration 

measures. Facilities that recirculate a 

portion of their flow, but do not reduce 

flow sufficiently to satisfy the 

compliance option in § 125.103(a)(1)(i) 

may take into account the reduction in 

impingement mortality and entrainment 

associated with the reduction in flow 

when determining the net reduction 

associated with existing design and 

construction technologies and/or 

operational measures. This estimate 

must include a site-specific evaluation 

of the suitability of the technologies 

and/or operational measures based on 

the species that are found at the site, 

and may be determined based on 

representative studies (i.e., studies that 

have been conducted at a similar 

facility’s cooling water intake structures 

located in the same waterbody type with 

similar biological characteristics) and/or 

site-specific technology prototype or 

pilot studies; and

(D) Design and engineering 

calculations, drawings, and estimates 

prepared by a qualified professional to 

support the descriptions required by 

paragraphs (b)(4)(i)(A) and (B) of this 

section. 

(ii) Technology Installation and 

Operation Plan. If you choose the 

compliance alternative in 

§ 125.103(a)(2), (3), (4), or (5) and use 

design and construction technologies 

and/or operational measures in whole or 

in part to comply with the applicable 

requirements of § 125.103, you must 

submit the following information with 

your application for review and 

approval by the Director: 

(A) A schedule for the installation and 

maintenance of any new design and 

construction technologies. Any 

downtime of generating units to 

accommodate installation and/or 

maintenance of these technologies 

should be scheduled to coincide with 

otherwise necessary downtime (e.g., for 

repair, overhaul, or routine maintenance 

of the generating units) to the extent 

practicable. Where additional downtime 

is required, you may coordinate 

scheduling of this downtime with the 

North American Electric Reliability 

Council and/or other generators in your 

area to ensure that impacts to reliability 

and supply are minimized; 

(B) List of operational and other 

parameters to be monitored, and the 

location and frequency that you will 

monitor them; 

(C) List of activities you will 

undertake to ensure to the degree 

practicable the efficacy of installed 

design and construction technologies 

and operational measures, and your 

schedule for implementing them; 

(D) A schedule and methodology for 

assessing the efficacy of any installed 

design and construction technologies 

and operational measures in meeting 

applicable performance standards or 

site-specific requirements, including an 

adaptive management plan for revising 

design and construction technologies, 

operational measures, operation and 

maintenance requirements, and/or 

monitoring requirements if your 

assessment indicates that applicable 

performance standards or site-specific 

requirements are not being met; and 

(E) If you choose the compliance 

alternative in § 125.103(a)(4), 

documentation that the appropriate site 

conditions in § 125.108(a) or (b) exist at 

your facility. 

(5) Restoration Plan. If you propose to 

use restoration measures, in whole or in 

part, to meet the applicable 

requirements in § 125.103, you must 

submit the following information with 

your application for review and 

approval by the Director. You must 

address species of concern identified in 

consultation with Federal, State, and 

Tribal fish and wildlife management 

agencies with responsibility for fisheries 

and wildlife potentially affected by your 

cooling water intake structure(s). 

(i) A demonstration to the Director 

that you have evaluated the use of 

design and construction technologies 

and/or operational measures for your 

facility and an explanation of how you 

determined that restoration would be 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68551

more feasible, cost-effective, or 

environmentally desirable; 

(ii) A narrative description of the 

design and operation of all restoration 

measures (existing and proposed) that 

you have in place or will use to produce 

fish and shellfish; 

(iii) Quantification of the ecological 

benefits of the proposed restoration 

measures. You must use information 

from the Impingement Mortality and/or 

Entrainment Characterization Study 

required in paragraph (b)(3) of this 

section, and any other available and 

appropriate information, to estimate the 

reduction in fish and shellfish 

impingement mortality and/or 

entrainment that would be necessary for 

your facility to comply with 

§ 125.103(c)(2). You must then calculate 

the production of fish and shellfish that 

you will achieve with the restoration 

measures you will or have already 

installed. You must include a 

discussion of the nature and magnitude 

of uncertainty associated with the 

performance of these restoration 

measures. You must also include a 

discussion of the time frame within 

which these ecological benefits are 

expected to accrue; 

(iv) Design calculations, drawings, 

and estimates to document that your 

proposed restoration measures in 

combination with design and 

construction technologies and/or 

operational measures, or alone, will 

meet the requirements of 

§ 125.103(c)(2). If the restoration 

measures address the same fish and 

shellfish species identified in the 

Impingement Mortality and/or 

Entrainment Characterization Study (inkind restoration), you must demonstrate 

that the restoration measures will 

produce a level of these fish and 

shellfish substantially similar to that 

which would result from meeting 

applicable performance standards in 

§ 125.103(b), or that they will satisfy 

site-specific requirements established 

pursuant to § 125.103(a)(5). If the 

restoration measures address fish and 

shellfish species different from those 

identified in the Impingement Mortality 

and/or Entrainment Characterization 

Study (out-of-kind restoration), you 

must demonstrate that the restoration 

measures produce ecological benefits 

substantially similar to or greater than 

those that would be realized through inkind restoration. Such a demonstration 

should be based on a watershed 

approach to restoration planning and 

consider applicable multi-agency 

watershed restoration plans, sitespecific peer-reviewed ecological 

studies, and/or consultation with 

appropriate Federal, State, and Tribal 

fish and wildlife management agencies. 

(v) A plan utilizing an adaptive 

management method for implementing, 

maintaining, and demonstrating the 

efficacy of the restoration measures you 

have selected and for determining the 

extent to which the restoration 

measures, or the restoration measures in 

combination with design and 

construction technologies and 

operational measures, have met the 

applicable requirements of 

§ 125.103(c)(2). The plan must include: 

(A) A monitoring plan that includes a 

list of the restoration parameters that 

will be monitored, the frequency at 

which you will monitor them, and 

success criteria for each parameter; 

(B) A list of activities you will 

undertake to ensure the efficacy of the 

restoration measures, a description of 

the linkages between these activities 

and the items in paragraph (b)(5)(v)(A) 

of this section, and an implementation 

schedule; and

(C) A process for revising the 

Restoration Plan as new information, 

including monitoring data, becomes 

available, if the applicable requirements 

under § 125.103(c)(2) are not being met. 

(vi) A summary of any past or ongoing 

consultation with appropriate Federal, 

State, and Tribal fish and wildlife 

management agencies on your use of 

restoration measures including a copy of 

any written comments received as a 

result of such consultations; 

(vii) If requested by the Director, a 

peer review of the items you submit for 

the Restoration Plan. You must choose 

the peer reviewers in consultation with 

the Director who may consult with EPA 

and Federal, State, and Tribal fish and 

wildlife management agencies with 

responsibility for fish and wildlife 

potentially affected by your cooling 

water intake structure(s). Peer reviewers 

must have appropriate qualifications 

(e.g., in the fields of geology, 

engineering, and/or biology, etc.) 

depending upon the materials to be 

reviewed; and 

(viii) A description of the information 

to be included in a biennial status report 

to the Director. 

(6) Information to Support Sitespecific Determination of Best 

Technology Available for Minimizing 

Adverse Environmental Impact. If you 

have requested a site-specific 

determination of best technology 

available for minimizing adverse 

environmental impact pursuant to 

§ 125.103(a)(5)(i) because of costs 

significantly greater than those 

considered by the Administrator for a 

facility like yours in establishing the 

applicable performance standards of 

§ 125.103(b), you are required to provide 

to the Director the information specified 

in paragraphs (b)(6)(i) and (b)(6)(iii) of 

this section. If you have requested a sitespecific determination of best 

technology available for minimizing 

adverse environmental impact pursuant 

to § 125.103(a)(5)(ii) because of costs 

significantly greater than the benefits of 

meeting the applicable performance 

standards of § 125.103(b) at your 

facility, you must provide the 

information specified in paragraphs 

(b)(6)(i), (b)(6)(ii), and (b)(6)(iii) of this 

section: 

(i) Comprehensive Cost Evaluation 

Study. You must perform and submit 

the results of a Comprehensive Cost 

Evaluation Study, that includes: 

(A) Engineering cost estimates in 

sufficient detail to document the costs 

of implementing design and 

construction technologies, operational 

measures, and/or restoration measures 

at your facility that would be needed to 

meet the applicable performance 

standards of § 125.103(b); 

(B) A demonstration that the costs 

documented in paragraph (b)(6)(i)(A) of 

this section significantly exceed either 

those considered by the Administrator 

for a facility like yours in establishing 

the applicable performance standards or 

the benefits of meeting the applicable 

performance standards at your facility; 

and 

(C) Engineering cost estimates in 

sufficient detail to document the costs 

of implementing the design and 

construction technologies, operational 

measures, and/or restoration measures 

in your Site-Specific Technology Plan 

developed in accordance with 

paragraph (b)(6)(iii) of this section. 

(ii) Benefits Valuation Study. If you 

are seeking a site-specific determination 

of best technology available for 

minimizing adverse environmental 

impact because of costs significantly 

greater than the benefits of meeting the 

applicable performance standards of 

§ 125.103(b) at your facility, you must 

use a comprehensive methodology to 

fully value the impacts of impingement 

mortality and entrainment at your site 

and the benefits achievable by meeting 

the applicable performance standards. 

In addition to the valuation estimates, 

the benefit study must include the 

following: 

(A) A description of the 

methodology(ies) used to value 

commercial, recreational, and ecological 

benefits (including any non-use 

benefits, if applicable); 

(B) Documentation of the basis for any 

assumptions and quantitative estimates. 

If you plan to use an entrainment 

survival rate other than zero, you must 

68552 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

submit a determination of entrainment 

survival at your facility based on a study 

approved by the Director; 

(C) An analysis of the effects of 

significant sources of uncertainty on the 

results of the study; and 

(D) If requested by the Director, a peer 

review of the items you submit in the 

Benefits Valuation Study. You must 

choose the peer reviewers in 

consultation with the Director who may 

consult with EPA and Federal, State, 

and Tribal fish and wildlife 

management agencies with 

responsibility for fish and wildlife 

potentially affected by your cooling 

water intake structure. Peer reviewers 

must have appropriate qualifications 

depending upon the materials to be 

reviewed. 

(E) A narrative description of any 

non-monetized benefits that would be 

realized at your site if you were to meet 

the applicable performance standards 

and a qualitative assessment of their 

magnitude and significance. 

(iii) Site-Specific Technology Plan.

Based on the results of the 

Comprehensive Cost Evaluation Study 

required by paragraph (b)(6)(i) of this 

section, and the Benefits Valuation 

Study required by paragraph (b)(6)(ii) of 

this section, if applicable, you must 

submit a Site-Specific Technology Plan 

to the Director for review and approval. 

The plan must contain the following 

information: 

(A) A narrative description of the 

design and operation of all existing and 

proposed design and construction 

technologies, operational measures, 

and/or restoration measures that you 

have selected in accordance with 

§ 125.103(a)(5); 

(B) An engineering estimate of the 

efficacy of the proposed and/or 

implemented design and construction 

technologies or operational measures, 

and/or restoration measures. This 

estimate must include a site-specific 

evaluation of the suitability of the 

technologies or operational measures for 

reducing impingement mortality and/or 

entrainment (as applicable) of all life 

stages of fish and shellfish based on 

representative studies (e.g., studies that 

have been conducted at cooling water 

intake structures located in the same 

waterbody type with similar biological 

characteristics) and, if applicable, sitespecific technology prototype or pilot 

studies. If restoration measures will be 

used, you must provide a Restoration 

Plan that includes the elements 

described in paragraph (b)(5) of this 

section. 

(C) A demonstration that the proposed 

and/or implemented design and 

construction technologies, operational 

measures, and/or restoration measures 

achieve an efficacy that is as close as 

practicable to the applicable 

performance standards of § 125.103(b) 

without resulting in costs significantly 

greater than either the costs considered 

by the Administrator for a facility like 

yours in establishing the applicable 

performance standards, or as 

appropriate, the benefits of complying 

with the applicable performance 

standards at your facility; 

(D) Design and engineering 

calculations, drawings, and estimates 

prepared by a qualified professional to 

support the elements of the Plan. 

(7) Verification Monitoring Plan. If 

you comply using compliance 

alternatives in § 125.103(a)(2), (3), (4), or 

(5) using design and construction 

technologies and/or operational 

measures, you must submit a plan to 

conduct, at a minimum, two years of 

monitoring to verify the full-scale 

performance of the proposed or already 

implemented technologies and/or 

operational measures. The verification 

study must begin once the design and 

construction technologies and/or 

operational measures are installed and 

continue for a period of time that is 

sufficient to demonstrate to the Director 

whether the facility is meeting the 

applicable performance standards in 

§ 125.103(b) or site-specific 

requirements developed pursuant to 

§ 125.103(a)(5). The plan must provide 

the following: 

(i) Description of the frequency and 

duration of monitoring, the parameters 

to be monitored, and the basis for 

determining the parameters and the 

frequency and duration for monitoring. 

The parameters selected and duration 

and frequency of monitoring must be 

consistent with any methodology for 

assessing success in meeting applicable 

performance standards in your 

Technology Installation and Operation 

Plan as required by paragraph (b)(4)(ii) 

of this section.

(ii) A proposal on how naturally 

moribund fish and shellfish that enter 

the cooling water intake structure would 

be identified and taken into account in 

assessing success in meeting the 

performance standards in § 125.103(b) 

or site-specific requirements developed 

pursuant to § 125.103(a)(5). 

(iii) A description of the information 

to be included in a biennial status report 

to the Director.

OPTION B FOR PARAGRAPH (b)—

[This language reflects the regulatory 

option that defines a Phase III existing 

facility as one with design intake 

flows of 100 MGD or more, located on 

oceans, estuaries, tidal rivers, or one 

of the Great Lakes]:

(b) Comprehensive Demonstration 

Study. The purpose of the 

Comprehensive Demonstration Study 

(Study) is to characterize impingement 

mortality and entrainment, to describe 

the operation of your cooling water 

intake structures, and to confirm that 

the technologies, operational measures, 

and/or restoration measures you have 

selected and installed, or will install, at 

your facility meet the applicable 

requirements of § 125.103. All facilities 

except those that have met the 

applicable requirements in accordance 

with §§ 125.103(a)(1)(i), 

125.103(a)(1)(ii), and 125.103(a)(4) must 

submit all applicable portions of the 

Comprehensive Demonstration Study to 

the Director in accordance with 

paragraph (a) of this section. Facilities 

that meet the requirements in 

§ 125.103(a)(1)(i) by reducing their flow 

commensurate with a closed-cycle, 

recirculating system are not required to 

submit a Comprehensive Demonstration 

Study. Facilities that meet the 

requirements in § 125.103(a)(1)(ii) by 

reducing their design intake velocity to 

0.5 ft/sec or less are required to submit 

a Study only for the entrainment 

requirements. Facilities that meet the 

requirements in § 125.103(a)(4) and 

have installed and properly operate and 

maintain an approved design and 

construction technology (in accordance 

with § 125.108) are required to submit 

only the Technology Installation and 

Operation Plan in paragraph (b)(4) of 

this section and the Verification 

Monitoring Plan in paragraph (b)(7) of 

this section. The Comprehensive 

Demonstration Study must include: 

(1) Proposal for Information 

Collection. You must submit to the 

Director for review and comment a 

description of the information you will 

use to support your Study. The Proposal 

for Information Collection must be 

submitted prior to the start of 

information collection activities, but 

you may initiate such activities prior to 

receiving comment from the Director. 

The proposal must include: 

(i) A description of the proposed and/

or implemented technologies, 

operational measures, and/or restoration 

measures to be evaluated in the Study; 

(ii) A list and description of any 

historical studies characterizing 

impingement mortality and entrainment 

and/or the physical and biological 

conditions in the vicinity of the cooling 

water intake structures and their 

relevance to this proposed Study. If you 

propose to use existing data, you must 

demonstrate the extent to which the 

data are representative of current 

conditions and that the data were 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68553

collected using appropriate quality 

assurance/quality control procedures; 

(iii) A summary of any past or 

ongoing consultations with appropriate 

Federal, State, and Tribal fish and 

wildlife agencies that are relevant to this 

Study and a copy of written comments 

received as a result of such 

consultations; and 

(iv) A sampling plan for any new field 

studies you propose to conduct in order 

to ensure that you have sufficient data 

to develop a scientifically valid estimate 

of impingement mortality and 

entrainment at your site. The sampling 

plan must document all methods and 

quality assurance/quality control 

procedures for sampling and data 

analysis. The sampling and data 

analysis methods you propose must be 

appropriate for a quantitative survey 

and include consideration of the 

methods used in other studies 

performed in the source waterbody. The 

sampling plan must include a 

description of the study area (including 

the area of influence of the cooling 

water intake structure(s)), and provide a 

taxonomic identification of the sampled 

or evaluated biological assemblages 

(including all life stages of fish and 

shellfish). 

(2) Impingement Mortality and 

Entrainment Characterization Study.

You must submit to the Director an 

Impingement Mortality and Entrainment 

Characterization Study whose purpose 

is to provide information to support the 

development of a calculation baseline 

for evaluating impingement mortality 

and entrainment and to characterize 

current impingement mortality and 

entrainment. The Impingement 

Mortality and Entrainment 

Characterization Study must include the 

following, in sufficient detail to support 

development of the other elements of 

the Comprehensive Demonstration 

Study: 

(i) Taxonomic identifications of all 

life stages of fish, shellfish, and any 

species protected under Federal, State, 

or Tribal Law (including threatened or 

endangered species) that are in the 

vicinity of the cooling water intake 

structure(s) and are susceptible to 

impingement and entrainment; 

(ii) A characterization of all life stages 

of fish, shellfish, and any species 

protected under Federal, State, or Tribal 

Law (including threatened or 

endangered species) identified pursuant 

to paragraph (b)(2)(i) of this section, 

including a description of the 

abundance and temporal and spatial 

characteristics in the vicinity of the 

cooling water intake structure(s), based 

on sufficient data to characterize 

annual, seasonal, and diel variations in 

impingement mortality and entrainment 

(e.g., related to climate and weather 

differences, spawning, feeding and 

water column migration). These may 

include historical data that are 

representative of the current operation 

of your facility and of biological 

conditions at the site; 

(iii) Documentation of the current 

impingement mortality and entrainment 

of all life stages of fish, shellfish, and 

any species protected under Federal, 

State, or Tribal Law (including 

threatened or endangered species) 

identified pursuant to paragraph (b)(2)(i) 

of this section and an estimate of 

impingement mortality and entrainment 

to be used as the calculation baseline. 

The documentation may include 

historical data that are representative of 

the current operation of your facility 

and of biological conditions at the site. 

Impingement mortality and entrainment 

samples to support the calculations 

required in paragraphs (b)(3)(i)(C) and 

(b)(4)(iii) of this section must be 

collected during periods of 

representative operational flows for the 

cooling water intake structure and the 

flows associated with the samples must 

be documented; 

(3) Technology and Compliance 

Assessment Information—(i) Design and 

Construction Technology Plan. If you 

choose to use design and construction 

technologies and/or operational 

measures, in whole or in part to meet 

the requirements of § 125.103(a)(2) or 

(3), you must submit a Design and 

Construction Technology Plan to the 

Director for review and approval. The 

plan must explain the technologies and/

or operational measures you have in 

place and/or have selected to meet the 

requirements in § 125.103. (Examples of 

potentially appropriate technologies 

may include, but are not limited to, 

wedgewire screens, fine mesh screens, 

fish handling and return systems, 

barrier nets, aquatic filter barrier 

systems, vertical and/or lateral 

relocation of the cooling water intake 

structure, and enlargement of the 

cooling water intake structure opening 

to reduce velocity. Examples of 

potentially appropriate operational 

measures may include, but are not 

limited to, seasonal shutdowns, 

reductions in flow, and continuous or 

more frequent rotation of traveling 

screens.) The plan must contain the 

following information: 

(A) A narrative description of the 

design and operation of all design and 

construction technologies and/or 

operational measures (existing and 

proposed), including fish handling and 

return systems, that you have in place 

or will use to meet the requirements to 

reduce impingement mortality of those 

species expected to be most susceptible 

to impingement, and information that 

demonstrates the efficacy of the 

technologies and/or operational 

measures for those species; 

(B) A narrative description of the 

design and operation of all design and 

construction technologies and/or 

operational measures (existing and 

proposed) that you have in place or will 

use to meet the requirements to reduce 

entrainment of those species expected to 

be the most susceptible to entrainment 

and information that demonstrates the 

efficacy of the technologies and/or 

operational measures for those species;

(C) Calculations of the reduction in 

impingement mortality and entrainment 

of all life stages of fish and shellfish that 

would be achieved by the technologies 

and/or operational measures you have 

selected based on the Impingement 

Mortality and Entrainment 

Characterization Study in paragraph 

(b)(2) of this section. In determining 

compliance with any requirements to 

reduce impingement mortality and 

entrainment, you must assess the total 

reduction in impingement mortality and 

entrainment against the calculation 

baseline determined in accordance with 

paragraph (b)(2) of this section. 

Reductions in impingement mortality 

and entrainment from this calculation 

baseline as a result of any design and 

construction technologies and/or 

operational measures already 

implemented at your facility should be 

added to the reductions expected to be 

achieved by any additional design and/

or construction technologies and 

operational measures that will be 

implemented, and any increases in fish 

and shellfish within the waterbody 

attributable to your restoration 

measures. Facilities that recirculate a 

portion of their flow, but do not reduce 

flow sufficiently to satisfy the 

compliance option in § 125.103(a)(1)(i) 

may take into account the reduction in 

impingement mortality and entrainment 

associated with the reduction in flow 

when determining the net reduction 

associated with existing design and 

construction technologies and/or 

operational measures. This estimate 

must include a site-specific evaluation 

of the suitability of the technologies 

and/or operational measures based on 

the species that are found at the site, 

and may be determined based on 

representative studies (i.e., studies that 

have been conducted at a similar 

facility’s cooling water intake structures 

located in the same waterbody type with 

similar biological characteristics) and/or 

site-specific technology prototype or 

pilot studies; and 

68554 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

(D) Design and engineering 

calculations, drawings, and estimates 

prepared by a qualified professional to 

support the descriptions required by 

paragraphs (b)(3)(i)(A) and (B) of this 

section. 

(ii) Technology Installation and 

Operation Plan. If you choose the 

compliance alternative in 

§ 125.103(a)(2), (3), (4), or (5) and use 

design and construction technologies 

and/or operational measures in whole or 

in part to comply with the applicable 

requirements of § 125.103, you must 

submit the following information with 

your application for review and 

approval by the Director: 

(A) A schedule for the installation and 

maintenance of any new design and 

construction technologies. Any 

downtime of generating units to 

accommodate installation and/or 

maintenance of these technologies 

should be scheduled to coincide with 

otherwise necessary downtime (e.g., for 

repair, overhaul, or routine maintenance 

of the generating units) to the extent 

practicable. Where additional downtime 

is required, you may coordinate 

scheduling of this downtime with the 

North American Electric Reliability 

Council and/or other generators in your 

area to ensure that impacts to reliability 

and supply are minimized; 

(B) List of operational and other 

parameters to be monitored, and the 

location and frequency that you will 

monitor them; 

(C) List of activities you will 

undertake to ensure to the degree 

practicable the efficacy of installed 

design and construction technologies 

and operational measures, and your 

schedule for implementing them; 

(D) A schedule and methodology for 

assessing the efficacy of any installed 

design and construction technologies 

and operational measures in meeting 

applicable performance standards or 

site-specific requirements, including an 

adaptive management plan for revising 

design and construction technologies, 

operational measures, operation and 

maintenance requirements, and/or 

monitoring requirements if your 

assessment indicates that applicable 

performance standards or site-specific 

requirements are not being met; and 

(E) If you choose the compliance 

alternative in § 125.103(a)(4), 

documentation that the appropriate site 

conditions in § 125.108(b) exist at your 

facility. 

(4) Restoration Plan. If you propose to 

use restoration measures, in whole or in 

part, to meet the applicable 

requirements in § 125.103, you must 

submit the following information with 

your application for review and 

approval by the Director. You must 

address species of concern identified in 

consultation with Federal, State, and 

Tribal fish and wildlife management 

agencies with responsibility for fisheries 

and wildlife potentially affected by your 

cooling water intake structure(s). 

(i) A demonstration to the Director 

that you have evaluated the use of 

design and construction technologies 

and/or operational measures for your 

facility and an explanation of how you 

determined that restoration would be 

more feasible, cost-effective, or 

environmentally desirable; 

(ii) A narrative description of the 

design and operation of all restoration 

measures (existing and proposed) that 

you have in place or will use to produce 

fish and shellfish; 

(iii) Quantification of the ecological 

benefits of the proposed restoration 

measures. You must use information 

from the Impingement Mortality and 

Entrainment Characterization Study 

required in paragraph (b)(2) of this 

section, and any other available and 

appropriate information, to estimate the 

reduction in fish and shellfish 

impingement mortality and entrainment 

that would be necessary for your facility 

to comply with § 125.103(c)(2). You 

must then calculate the production of 

fish and shellfish that you will achieve 

with the restoration measures you will 

or have already installed. You must 

include a discussion of the nature and 

magnitude of uncertainty associated 

with the performance of these 

restoration measures. You must also 

include a discussion of the time frame 

within which these ecological benefits 

are expected to accrue; 

(iv) Design calculations, drawings, 

and estimates to document that your 

proposed restoration measures in 

combination with design and 

construction technologies and/or 

operational measures, or alone, will 

meet the requirements of 

§ 125.103(c)(2). If the restoration 

measures address the same fish and 

shellfish species identified in the 

Impingement Mortality and Entrainment 

Characterization Study (in-kind 

restoration), you must demonstrate that 

the restoration measures will produce a 

level of these fish and shellfish 

substantially similar to that which 

would result from meeting applicable 

performance standards in § 125.103(b), 

or that they will satisfy site-specific 

requirements established pursuant to 

§ 125.103(a)(5). If the restoration 

measures address fish and shellfish 

species different from those identified 

in the Impingement Mortality and 

Entrainment Characterization Study 

(out-of-kind restoration), you must 

demonstrate that the restoration 

measures produce ecological benefits 

substantially similar to or greater than 

those that would be realized through inkind restoration. Such a demonstration 

should be based on a watershed 

approach to restoration planning and 

consider applicable multi-agency 

watershed restoration plans, sitespecific peer-reviewed ecological 

studies, and/or consultation with 

appropriate Federal, State, and Tribal 

fish and wildlife management agencies. 

(v) A plan utilizing an adaptive 

management method for implementing, 

maintaining, and demonstrating the 

efficacy of the restoration measures you 

have selected and for determining the 

extent to which the restoration 

measures, or the restoration measures in 

combination with design and 

construction technologies and 

operational measures, have met the 

applicable requirements of 

§ 125.103(c)(2). The plan must include: 

(A) A monitoring plan that includes a 

list of the restoration parameters that 

will be monitored, the frequency at 

which you will monitor them, and 

success criteria for each parameter; 

(B) A list of activities you will 

undertake to ensure the efficacy of the 

restoration measures, a description of 

the linkages between these activities 

and the items in paragraph (b)(4)(v)(A) 

of this section, and an implementation 

schedule; and 

(C) A process for revising the 

Restoration Plan as new information, 

including monitoring data, becomes 

available, if the applicable requirements 

under § 125.103(c)(2) are not being met.

(vi) A summary of any past or ongoing 

consultation with appropriate Federal, 

State, and Tribal fish and wildlife 

management agencies on your use of 

restoration measures including a copy of 

any written comments received as a 

result of such consultations; 

(vii) If requested by the Director, a 

peer review of the items you submit for 

the Restoration Plan. You must choose 

the peer reviewers in consultation with 

the Director who may consult with EPA 

and Federal, State, and Tribal fish and 

wildlife management agencies with 

responsibility for fish and wildlife 

potentially affected by your cooling 

water intake structure(s). Peer reviewers 

must have appropriate qualifications 

(e.g., in the fields of geology, 

engineering, and/or biology, etc.) 

depending upon the materials to be 

reviewed; and 

(viii) A description of the information 

to be included in a biennial status report 

to the Director. 

(5) Information to Support Sitespecific Determination of Best 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68555

Technology Available for Minimizing 

Adverse Environmental Impact. If you 

have requested a site-specific 

determination of best technology 

available for minimizing adverse 

environmental impact pursuant to 

§ 125.103(a)(5)(i) because of costs 

significantly greater than those 

considered by the Administrator for a 

facility like yours in establishing the 

applicable performance standards of 

§ 125.103(b), you are required to provide 

to the Director the information specified 

in paragraphs (b)(5)(i) and (b)(5)(iii) of 

this section. If you have requested a sitespecific determination of best 

technology available for minimizing 

adverse environmental impact pursuant 

to § 125.103(a)(5)(ii) because of costs 

significantly greater than the benefits of 

meeting the applicable performance 

standards of § 125.103(b) at your 

facility, you must provide the 

information specified in paragraphs 

(b)(5)(i), (b)(5)(ii), and (b)(5)(iii) of this 

section: 

(i) Comprehensive Cost Evaluation 

Study. You must perform and submit 

the results of a Comprehensive Cost 

Evaluation Study, that includes: 

(A) Engineering cost estimates in 

sufficient detail to document the costs 

of implementing design and 

construction technologies, operational 

measures, and/or restoration measures 

at your facility that would be needed to 

meet the applicable performance 

standards of § 125.103(b); 

(B) A demonstration that the costs 

documented in paragraph (b)(5)(i)(A) of 

this section significantly exceed either 

those considered by the Administrator 

for a facility like yours in establishing 

the applicable performance standards or 

the benefits of meeting the applicable 

performance standards at your facility; 

and 

(C) Engineering cost estimates in 

sufficient detail to document the costs 

of implementing the design and 

construction technologies, operational 

measures, and/or restoration measures 

in your Site-Specific Technology Plan 

developed in accordance with 

paragraph (b)(5)(iii) of this section. 

(ii) Benefits Valuation Study. If you 

are seeking a site-specific determination 

of best technology available for 

minimizing adverse environmental 

impact because of costs significantly 

greater than the benefits of meeting the 

applicable performance standards of 

§ 125.103(b) at your facility, you must 

use a comprehensive methodology to 

fully value the impacts of impingement 

mortality and entrainment at your site 

and the benefits achievable by meeting 

the applicable performance standards. 

In addition to the valuation estimates, 

the benefit study must include the 

following: 

(A) A description of the 

methodology(ies) used to value 

commercial, recreational, and ecological 

benefits (including any non-use 

benefits, if applicable); 

(B) Documentation of the basis for any 

assumptions and quantitative estimates. 

If you plan to use an entrainment 

survival rate other than zero, you must 

submit a determination of entrainment 

survival at your facility based on a study 

approved by the Director; 

(C) An analysis of the effects of 

significant sources of uncertainty on the 

results of the study; and 

(D) If requested by the Director, a peer 

review of the items you submit in the 

Benefits Valuation Study. You must 

choose the peer reviewers in 

consultation with the Director who may 

consult with EPA and Federal, State, 

and Tribal fish and wildlife 

management agencies with 

responsibility for fish and wildlife 

potentially affected by your cooling 

water intake structure. Peer reviewers 

must have appropriate qualifications 

depending upon the materials to be 

reviewed. 

(E) A narrative description of any 

non-monetized benefits that would be 

realized at your site if you were to meet 

the applicable performance standards 

and a qualitative assessment of their 

magnitude and significance. 

(iii) Site-Specific Technology Plan.

Based on the results of the 

Comprehensive Cost Evaluation Study 

required by paragraph (b)(5)(i) of this 

section, and the Benefits Valuation 

Study required by paragraph (b)(5)(ii) of 

this section, if applicable, you must 

submit a Site-Specific Technology Plan 

to the Director for review and approval. 

The plan must contain the following 

information: 

(A) A narrative description of the 

design and operation of all existing and 

proposed design and construction 

technologies, operational measures, 

and/or restoration measures that you 

have selected in accordance with 

§ 125.103(a)(5); 

(B) An engineering estimate of the 

efficacy of the proposed and/or 

implemented design and construction 

technologies or operational measures, 

and/or restoration measures. This 

estimate must include a site-specific 

evaluation of the suitability of the 

technologies or operational measures for 

reducing impingement mortality and 

entrainment of all life stages of fish and 

shellfish based on representative studies 

(e.g., studies that have been conducted 

at cooling water intake structures 

located in the same waterbody type with 

similar biological characteristics) and, if 

applicable, site-specific technology 

prototype or pilot studies. If restoration 

measures will be used, you must 

provide a Restoration Plan that includes 

the elements described in paragraph 

(b)(4) of this section. 

(C) A demonstration that the proposed 

and/or implemented design and 

construction technologies, operational 

measures, and/or restoration measures 

achieve an efficacy that is as close as 

practicable to the applicable 

performance standards of § 125.103(b) 

without resulting in costs significantly 

greater than either the costs considered 

by the Administrator for a facility like 

yours in establishing the applicable 

performance standards, or as 

appropriate, the benefits of complying 

with the applicable performance 

standards at your facility; 

(D) Design and engineering 

calculations, drawings, and estimates 

prepared by a qualified professional to 

support the elements of the Plan. 

(6) Verification Monitoring Plan. If 

you comply using compliance 

alternatives in § 125.103(a)(2), (3), (4), or 

(5) using design and construction 

technologies and/or operational 

measures, you must submit a plan to 

conduct, at a minimum, two years of 

monitoring to verify the full-scale 

performance of the proposed or already 

implemented technologies and/or 

operational measures. The verification 

study must begin once the design and 

construction technologies and/or 

operational measures are installed and 

continue for a period of time that is 

sufficient to demonstrate to the Director 

whether the facility is meeting the 

applicable performance standards in 

§ 125.103(b) or site-specific 

requirements developed pursuant to 

§ 125.103(a)(5). The plan must provide 

the following: 

(i) Description of the frequency and 

duration of monitoring, the parameters 

to be monitored, and the basis for 

determining the parameters and the 

frequency and duration for monitoring. 

The parameters selected and duration 

and frequency of monitoring must be 

consistent with any methodology for 

assessing success in meeting applicable 

performance standards in your 

Technology Installation and Operation 

Plan as required by paragraph (b)(3)(ii) 

of this section. 

(ii) A proposal on how naturally 

moribund fish and shellfish that enter 

the cooling water intake structure would 

be identified and taken into account in 

assessing success in meeting the 

performance standards in § 125.103(b).

68556 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

(iii) A description of the information 

to be included in a biennial status report 

to the Director.

§ 125.105 As an owner or operator of a 

Phase III existing facility, what monitoring 

must I perform? 

OPTION A FOR § 125.105—[This 

language reflects the regulatory option 

that defines a Phase III existing 

facility as one with design intake 

flows of 50 MGD or more, located on 

any waterbody type or the regulatory 

option that defines a Phase III existing 

facility as one with design intake 

flows 200 MGD or more, located on 

any waterbody type]:

As an owner or operator of a Phase III 

existing facility, you must perform 

monitoring, as applicable, in accordance 

with the Technology Installation and 

Operation Plan required by 

§ 125.104(b)(4)(ii), the Restoration Plan 

required by § 125.104(b)(5), the 

Verification Monitoring Plan required 

by § 125.104(b)(7), and any additional 

monitoring specified by the Director to 

demonstrate compliance with the 

applicable requirements of § 125.103.

OPTION B FOR § 125.105—[This 

language reflects the regulatory option 

that defines a Phase III existing 

facility as one with design intake 

flows of 100 MGD or more, located on 

oceans, estuaries, tidal rivers, or one 

of the Great Lakes]:

As an owner or operator of a Phase III 

existing facility, you must perform 

monitoring, as applicable, in accordance 

with the Technology Installation and 

Operation Plan required by 

§ 125.104(b)(3)(ii), the Restoration Plan 

required by § 125.104(b)(4), the 

Verification Monitoring Plan required 

by § 125.104(b)(6), and any additional 

monitoring specified by the Director to 

demonstrate compliance with the 

applicable requirements of § 125.103.

§ 125.106 As an owner or operator of a 

Phase III existing facility, what records must 

I keep and what information must I report? 

As an owner or operator of a Phase III 

existing facility you are required to keep 

records and report information and data 

to the Director as follows: 

(a) You must keep records of all the 

data used to complete the permit 

application and show compliance with 

the requirements of § 125.103, any 

supplemental information developed 

under § 125.104, and any compliance 

monitoring data submitted under 

§ 125.105, for a period of at least three 

(3) years from date of permit issuance. 

The Director may require that these 

records be kept for a longer period. 

(b) You must submit a status report to 

the Director for review every two years 

that includes appropriate monitoring 

data and other information as specified 

by the Director in accordance with 

§ 125.107(b)(5).

§ 125.107 As the Director, what must I do 

to comply with the requirements of this 

subpart? 

(a) Permit Application. As the 

Director, you must review materials 

submitted by the applicant under 40 

CFR 122.21(r) and § 125.104 before each 

permit renewal or reissuance. 

(1) You must review and comment on 

the Proposal for Information Collection 

submitted by the facility in accordance 

with § 125.104(a)(1). You are 

encouraged to provide comments 

expeditiously so that the permit 

applicant can make responsive 

modifications to its information 

gathering activities. If a facility submits 

a request in accordance with 

§ 125.104(a)(2)(ii) for an alternate 

schedule for submitting the information 

required in § 125.104, you must approve 

a schedule that is as expeditious as 

practicable, but does not extend beyond 

[3 years and 180 days from publication 

of the final rule] for Phase III existing 

facilities. If a facility submits a request 

in accordance with § 125.104(a)(3) to 

reduce the information about their 

cooling water intake structures and the 

source waterbody required to be 

submitted in their permit application 

(other than with the first permit 

application [60 days from publication of 

the final rule] for Phase III existing 

facilities), you must approve the request 

within 60 days if conditions at the 

facility and in the waterbody remain 

substantially unchanged since the 

previous application. 

(2) After receiving the permit 

application from the owner or operator 

of a Phase III existing facility, you must 

determine which of the requirements 

specified in § 125.103 apply to the 

facility. In addition, you must review 

materials to determine compliance with 

the applicable requirements. 

(3) At each permit renewal, you must 

review the application materials and 

monitoring data to determine whether 

new or revised requirements for design 

and construction technologies, 

operational measures, or restoration 

measures should be included in the 

permit to meet the applicable 

performance standards in § 125.103(b) 

or alternative site-specific requirements 

established pursuant to § 125.103(a)(5).

OPTION A FOR PARAGRAPH (b)—

[This language reflects the regulatory 

option that defines a Phase III existing 

facility as one with design intake 

flows of 50 MGD or more, located on 

any waterbody type or the regulatory 

option that defines a Phase III existing 

facility as one with design intake 

flows 200 MGD or more, located on 

any waterbody type]:

(b) Permitting Requirements. Section 

316(b) requirements are implemented 

for a facility through an NPDES permit. 

As the Director, you must consider the 

information submitted by the Phase III 

existing facility in its permit 

application, and determine the 

appropriate requirements and 

conditions to include in the permit 

based on the compliance alternatives in 

§ 125.103(a). The following 

requirements must be included in each 

permit: 

(1) Cooling Water Intake Structure 

Requirements. The permit conditions 

must include the requirements that 

implement the applicable provisions of 

§ 125.103. You must evaluate the 

performance of the design and 

construction technologies, operational 

measures, and/or restoration measures 

proposed and implemented by the 

facility and require additional or 

different design and construction 

technologies, operational measure, and/

or restoration measures, and/or 

improved operation and maintenance of 

existing technologies and measures, if 

needed to meet the applicable 

performance standards, restoration 

requirements, or alternative site-specific 

requirements. In determining 

compliance with the performance 

standards for facilities proposing to 

increase withdrawals of cooling water 

from a lake (other than a Great Lake) or 

a reservoir in § 125.103(b)(3), you must 

consider anthropogenic factors (those 

not considered ‘‘natural’’) unrelated to 

the Phase III existing facility’s cooling 

water intake structures that can 

influence the occurrence and location of 

a thermocline. These include source 

water inflows, other water withdrawals, 

managed water uses, wastewater 

discharges, and flow/level management 

practices (e.g., some reservoirs release 

water from deeper bottom layers). As 

the Director, you must coordinate with 

appropriate Federal, State, or Tribal fish 

and wildlife management agencies to 

determine if any disruption of the 

natural thermal stratification resulting 

from the proposed increased withdrawal 

of cooling water does not adversely 

affect the management of fisheries. 

Specifically: 

(i) You must review and approve the 

Design and Construction Technology 

Plan required in § 125.104(b)(4) to 

evaluate the suitability and feasibility of 

the design and construction technology 

and/or operational measures proposed 

to meet the performance standards in 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68557

§ 125.103(b) or site-specific 

requirements developed pursuant to 

§ 125.103(a)(5). 

(ii) If the facility proposes restoration 

measures in accordance with 

§ 125.103(c), you must review and 

approve the Restoration Plan required 

under § 125.104(b)(5) to determine 

whether the proposed measures, alone 

or in combination with design and 

construction technologies and/or 

operational measures, will meet the 

requirements under § 125.103(c).

(iii) In each reissued permit, you must 

include a condition in the permit 

requiring the facility to reduce 

impingement mortality and entrainment 

(or to increase fish production, if 

applicable) commensurate with the 

efficacy at the facility of the installed 

design and construction technologies, 

operational measures, and/or restoration 

measures. 

(iv) If the facility implements design 

and construction technologies and/or 

operational measures and requests that 

compliance with the requirements in 

§ 125.103 be measured for the first 

permit term (or subsequent permit 

terms, if applicable) employing the 

Technology Installation and Operation 

Plan in accordance with 

§ 125.104(b)(4)(ii), you must review the 

Technology Installation and Operation 

Plan to ensure it meets the requirements 

of § 125.104(b)(4)(ii). If the Technology 

Installation and Operation Plan meets 

the requirements of § 125.104(b)(4)(ii), 

you must approve the Technology 

Installation and Operation Plan and 

require the facility to meet the terms of 

the plan including any revision to the 

plan that may be necessary if applicable 

performance standards or alternative 

site-specific requirements are not being 

met. If the facility implements 

restoration measures and requests that 

compliance with the requirements in 

§ 125.103 be measured for the first 

permit term (or subsequent permit 

terms, if applicable) employing a 

Restoration Plan in accordance with 

§ 125.104(b)(5), you must review the 

Restoration Plan to ensure it meets the 

requirements of § 125.104(b)(5). If the 

Restoration Plan meets the requirements 

of § 125.104(b)(5), you must approve the 

plan and require the facility to meet the 

terms of the plan including any revision 

to the plan that may be necessary if 

applicable performance standards or 

site-specific requirements are not being 

met. In determining whether to approve 

a Technology Installation and Operation 

Plan or Restoration Plan, you must 

evaluate whether the design and 

construction technologies, operational 

measures, and/or restoration measures 

the facility has installed, or proposes to 

install, can reasonably be expected to 

meet the applicable performance 

standards in § 125.103(b), restoration 

requirements in § 125.103(c)(2), and/or 

alternative site-specific requirements 

established pursuant to § 125.103(a)(5), 

and whether the Technology Installation 

and Operation Plan and/or Restoration 

Plan complies with the applicable 

requirements of § 125.104(b). In 

reviewing the Technology Installation 

and Operation Plan, you must approve 

any reasonable scheduling provisions 

that are designed to ensure that impacts 

to energy reliability and supply are 

minimized, in accordance with 

§ 125.104(b)(4)(ii)(A). If the facility does 

not request that compliance with the 

requirements in § 125.103 be measured 

employing a Technology Installation 

and Operation Plan and/or Restoration 

Plan, or the facility has not been in 

compliance with the terms of its current 

Technology Installation and Operation 

Plan and/or Restoration Plan during the 

preceding permit term, you must require 

the facility to comply with the 

applicable performance standards in 

§ 125.103(b), restoration requirement in 

§ 125.103(c)(2), and/or alternative sitespecific requirements developed 

pursuant to § 125.103(a)(5). In 

considering a permit application, you 

must review the performance of the 

design and construction technologies, 

operational measures, and/or restoration 

measures implemented and require 

additional or different design and 

construction technologies, operational 

measures, and/or restoration measures, 

and/or improved operation and 

maintenance of existing technologies 

and measures, if needed to meet the 

applicable performance standards, 

restoration requirements, and/or 

alternative site-specific requirements. 

(v) You must review and approve the 

proposed Verification Monitoring Plan 

submitted under § 125.104(b)(7) (for 

design and construction technologies) 

and/or monitoring provisions of the 

Restoration Plan submitted under 

§ 125.104(b)(5)(v) and require that the 

monitoring continue for a sufficient 

period of time to demonstrate whether 

the design and construction technology, 

operational measures, and/or restoration 

measures meet the applicable 

performance standards in § 125.103(b), 

restoration requirements in 

§ 125.103(c)(2) and/or site-specific 

requirements established pursuant to 

§ 125.103(a)(5). 

(vi) If a facility requests requirements 

based on a site-specific determination of 

best technology available for 

minimizing adverse environmental 

impact, you must review the application 

materials submitted under 

§ 125.104(b)(6) and any other 

information you may have, including 

quantitative and qualitative benefits, 

that would be relevant to a 

determination of whether alternative 

requirements are appropriate for the 

facility. If a facility submits a study to 

support entrainment survival at the 

facility, you must review and approve 

the results of that study. If you 

determine that alternative requirements 

are appropriate, you must make a sitespecific determination of best 

technology available for minimizing 

adverse environmental impact in 

accordance with § 125.103(a)(5). You, as 

the Director, may request revisions to 

the information submitted by the facility 

in accordance with § 125.104(b)(6) if it 

does not provide an adequate basis for 

you to make this determination. Any 

alternative site-specific requirements 

established based on new and/or 

existing design and construction 

technologies, operational measures, 

and/or restoration measures, must 

achieve an efficacy that is, in your 

judgment, as close as practicable to the 

applicable performance standards of 

§ 125.103(b) without resulting in costs 

that are significantly greater than the 

costs considered by the Administrator 

for a like facility in establishing the 

applicable performance standards in 

§ 125.103(b), determined in accordance 

with § 125.103(a)(5)(i)(A) through (F), or 

the benefits of complying with the 

applicable performance standards at the 

facility. A ‘‘like facility’’ is one that is 

subject to the same requirements as 

those that would otherwise be 

applicable to the facility seeking a sitespecific determination. In other words, 

‘‘like facilities’’ for Phase III existing 

facilities include only other Phase III 

existing facilities; and 

(vii) You must review the proposed 

methods for assessing success in 

meeting applicable performance 

standards and/or restoration 

requirements submitted by the facility 

under § 125.104(b)(4)(ii)(D) and/or 

(b)(5)(v)(A), evaluate those and other 

available methods, and specify how 

assessment of success in meeting the 

performance standards and/or 

restoration requirements must be 

determined including the averaging 

period for determining the percent 

reduction in impingement mortality and 

entrainment and/or the production of 

fish and shellfish. Compliance for 

facilities who request that compliance 

be measured employing a Technology 

Installation and Operation Plan and/or 

Restoration Plan must be determined in 

accordance with § 125.107(b)(1)(iv). 

(2) Monitoring Conditions. You must 

require the facility to perform 

68558 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

monitoring in accordance with the 

Technology Installation and Operation 

Plan in § 125.104(b)(4)(ii), the 

Restoration Plan required by 

§ 125.104(b)(5), if applicable, and the 

Verification Monitoring Plan required 

by § 125.104(b)(7). In determining any 

additional applicable monitoring 

requirements in accordance with 

§ 125.105, you must consider the 

facility’s Verification Monitoring, 

Technology Installation and Operation, 

and/or Restoration Plans, as 

appropriate. You may modify the 

monitoring program based on changes 

in physical or biological conditions in 

the vicinity of the cooling water intake 

structure. 

(3) Record Keeping and Reporting. At 

a minimum, the permit must require the 

facility to report and keep records 

specified in § 125.106. 

(4) Design and Construction 

Technology Approval. (i) For a facility 

that chooses to demonstrate that it has 

installed and properly operate and 

maintain a design and construction 

technology approved in accordance 

with § 125.108, the Director must review 

and approve the information submitted 

in the Technology Installation and 

Operation Plan in § 125.104(b)(4)(ii) and 

determine if it meets the criteria in 

§ 125.108. 

(ii) If a person requests approval of a 

technology under § 125.108(b), the 

Director must review and approve the 

information submitted and determine its 

suitability for widespread use at 

facilities with similar site conditions in 

its jurisdiction with minimal study. As 

the Director, you must evaluate the 

adequacy of the technology when 

installed in accordance with the 

required design criteria and site 

conditions to consistently meet the 

performance standards in § 125.103. 

You, as the Director, may only approve 

a technology following public notice 

and consideration of comment regarding 

such approval.

(5) Biennial Status Report. You must 

specify monitoring data and other 

information to be included in a status 

report every two years. The other 

information may include operation and 

maintenance records, summaries of 

adaptive management activities, or any 

other information that is relevant to 

determining compliance with the terms 

of the facility’s Technology Operation 

and Installation Plan and/or Restoration 

Plan.

OPTION B FOR PARAGRAPH (b)—

[This language reflects the regulatory 

option that defines a Phase III existing 

facility as one with design intake 

flows of 100 MGD or more, located on 

oceans, estuaries, tidal rivers, or one 

of the Great Lakes]:

(b) Permitting Requirements. Section 

316(b) requirements are implemented 

for a facility through an NPDES permit. 

As the Director, you must consider the 

information submitted by the Phase III 

existing facility in its permit 

application, and determine the 

appropriate requirements and 

conditions to include in the permit 

based on the compliance alternatives in 

§ 125.103(a). The following 

requirements must be included in each 

permit: 

(1) Cooling Water Intake Structure 

Requirements. The permit conditions 

must include the requirements that 

implement the applicable provisions of 

§ 125.103. You must evaluate the 

performance of the design and 

construction technologies, operational 

measures, and/or restoration measures 

proposed and implemented by the 

facility and require additional or 

different design and construction 

technologies, operational measure, and/

or restoration measures, and/or 

improved operation and maintenance of 

existing technologies and measures, if 

needed to meet the applicable 

performance standards, restoration 

requirements, or alternative site-specific 

requirements. Specifically: 

(i) You must review and approve the 

Design and Construction Technology 

Plan required in § 125.104(b)(3) to 

evaluate the suitability and feasibility of 

the design and construction technology 

and/or operational measures proposed 

to meet the performance standards in 

§ 125.103(b) or site-specific 

requirements developed pursuant to 

§ 125.103(a)(5). 

(ii) If the facility proposes restoration 

measures in accordance with 

§ 125.103(c), you must review and 

approve the Restoration Plan required 

under § 125.104(b)(4) to determine 

whether the proposed measures, alone 

or in combination with design and 

construction technologies and/or 

operational measures, will meet the 

requirements under § 125.103(c). 

(iii) In each reissued permit, you must 

include a condition in the permit 

requiring the facility to reduce 

impingement mortality and entrainment 

(or to increase fish production, if 

applicable) commensurate with the 

efficacy at the facility of the installed 

design and construction technologies, 

operational measures, and/or restoration 

measures. 

(iv) If the facility implements design 

and construction technologies and/or 

operational measures and requests that 

compliance with the requirements in 

§ 125.103 be measured for the first 

permit term (or subsequent permit 

terms, if applicable) employing the 

Technology Installation and Operation 

Plan in accordance with 

§ 125.104(b)(3)(ii), you must review the 

Technology Installation and Operation 

Plan to ensure it meets the requirements 

of § 125.104(b)(3)(ii). If the Technology 

Installation and Operation Plan meets 

the requirements of § 125.104(b)(3)(ii), 

you must approve the Technology 

Installation and Operation Plan and 

require the facility to meet the terms of 

the plan including any revision to the 

plan that may be necessary if applicable 

performance standards or alternative 

site-specific requirements are not being 

met. If the facility implements 

restoration measures and requests that 

compliance with the requirements in 

§ 125.103 be measured for the first 

permit term (or subsequent permit 

terms, if applicable) employing a 

Restoration Plan in accordance with 

§ 125.104(b)(4), you must review the 

Restoration Plan to ensure it meets the 

requirements of § 125.104(b)(4). If the 

Restoration Plan meets the requirements 

of § 125.104(b)(4), you must approve the 

plan and require the facility to meet the 

terms of the plan including any revision 

to the plan that may be necessary if 

applicable performance standards or 

site-specific requirements are not being 

met. In determining whether to approve 

a Technology Installation and Operation 

Plan or Restoration Plan, you must 

evaluate whether the design and 

construction technologies, operational 

measures, and/or restoration measures 

the facility has installed, or proposes to 

install, can reasonably be expected to 

meet the applicable performance 

standards in § 125.103(b), restoration 

requirements in § 125.103(c)(2), and/or 

alternative site-specific requirements 

established pursuant to § 125.103(a)(5), 

and whether the Technology Installation 

and Operation Plan and/or Restoration 

Plan complies with the applicable 

requirements of § 125.104(b). In 

reviewing the Technology Installation 

and Operation Plan, you must approve 

any reasonable scheduling provisions 

that are designed to ensure that impacts 

to energy reliability and supply are 

minimized, in accordance with 

§ 125.104(b)(3)(ii)(A). If the facility does 

not request that compliance with the 

requirements in § 125.103 be measured 

employing a Technology Installation 

and Operation Plan and/or Restoration 

Plan, or the facility has not been in 

compliance with the terms of its current 

Technology Installation and Operation 

Plan and/or Restoration Plan during the 

preceding permit term, you must require 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68559

the facility to comply with the 

applicable performance standards in 

§ 125.103(b), restoration requirement in 

§ 125.103(c)(2), and/or alternative sitespecific requirements developed 

pursuant to § 125.103(a)(5). In 

considering a permit application, you 

must review the performance of the 

design and construction technologies, 

operational measures, and/or restoration 

measures implemented and require 

additional or different design and 

construction technologies, operational 

measures, and/or restoration measures, 

and/or improved operation and 

maintenance of existing technologies 

and measures, if needed to meet the 

applicable performance standards, 

restoration requirements, and/or 

alternative site-specific requirements. 

(v) You must review and approve the 

proposed Verification Monitoring Plan 

submitted under § 125.104(b)(6) (for 

design and construction technologies) 

and/or monitoring provisions of the 

Restoration Plan submitted under 

§ 125.104(b)(4)(v) and require that the 

monitoring continue for a sufficient 

period of time to demonstrate whether 

the design and construction technology, 

operational measures, and/or restoration 

measures meet the applicable 

performance standards in § 125.103(b), 

restoration requirements in 

§ 125.103(c)(2) and/or site-specific 

requirements established pursuant to 

§ 125.103(a)(5).

(vi) If a facility requests requirements 

based on a site-specific determination of 

best technology available for 

minimizing adverse environmental 

impact, you must review the application 

materials submitted under 

§ 125.104(b)(5) and any other 

information you may have, including 

quantitative and qualitative benefits, 

that would be relevant to a 

determination of whether alternative 

requirements are appropriate for the 

facility. If a facility submits a study to 

support entrainment survival at the 

facility, you must review and approve 

the results of that study. If you 

determine that alternative requirements 

are appropriate, you must make a sitespecific determination of best 

technology available for minimizing 

adverse environmental impact in 

accordance with § 125.103(a)(5). You, as 

the Director, may request revisions to 

the information submitted by the facility 

in accordance with § 125.104(b)(5) if it 

does not provide an adequate basis for 

you to make this determination. Any 

alternative site-specific requirements 

established based on new and/or 

existing design and construction 

technologies, operational measures, 

and/or restoration measures, must 

achieve an efficacy that is, in your 

judgment, as close as practicable to the 

applicable performance standards of 

§ 125.103(b) without resulting in costs 

that are significantly greater than the 

costs considered by the Administrator 

for a like facility in establishing the 

applicable performance standards in 

§ 125.103(b), determined in accordance 

with § 125.103(a)(5)(i)(A) through (F), or 

the benefits of complying with the 

applicable performance standards at the 

facility. A ‘‘like facility’’ is one that is 

subject to the same requirements as 

those that would otherwise be 

applicable to the facility seeking a sitespecific determination. In other words, 

‘‘like facilities’’ for Phase III existing 

facilities include only other Phase III 

existing facilities; and 

(vii) You must review the proposed 

methods for assessing success in 

meeting applicable performance 

standards and/or restoration 

requirements submitted by the facility 

under § 125.104(b)(3)(ii)(D) and/or 

(b)(4)(v)(A), evaluate those and other 

available methods, and specify how 

assessment of success in meeting the 

performance standards and/or 

restoration requirements must be 

determined including the averaging 

period for determining the percent 

reduction in impingement mortality and 

entrainment and/or the production of 

fish and shellfish. Compliance for 

facilities who request that compliance 

be measured employing a Technology 

Installation and Operation Plan and/or 

Restoration Plan must be determined in 

accordance with § 125.107(b)(1)(iv). 

(2) Monitoring Conditions. You must 

require the facility to perform 

monitoring in accordance with the 

Technology Installation and Operation 

Plan in § 125.104(b)(3)(ii), the 

Restoration Plan required by 

§ 125.104(b)(4), if applicable, and the 

Verification Monitoring Plan required 

by § 125.104(b)(6). In determining any 

additional applicable monitoring 

requirements in accordance with 

§ 125.105, you must consider the 

monitoring facility’s Verification 

Monitoring, Technology Installation and 

Operation, and/or Restoration Plans, as 

appropriate. You may modify the 

monitoring program based on changes 

in physical or biological conditions in 

the vicinity of the cooling water intake 

structure. 

(3) Record Keeping and Reporting. At 

a minimum, the permit must require the 

facility to report and keep records 

specified in § 125.106. 

(4) Design and Construction 

Technology Approval. (i) For a facility 

that chooses to demonstrate that it has 

installed and properly operate and 

maintain a design and construction 

technology approved in accordance 

with § 125.108, the Director must review 

and approve the information submitted 

in the Technology Installation and 

Operation Plan in § 125.104(b)(3)(ii) and 

determine if it meets the criteria in 

§ 125.108. 

(ii) If a person requests approval of a 

technology under § 125.108(b), the 

Director must review and approve the 

information submitted and determine its 

suitability for widespread use at 

facilities with similar site conditions in 

its jurisdiction with minimal study. As 

the Director, you must evaluate the 

adequacy of the technology when 

installed in accordance with the 

required design criteria and site 

conditions to consistently meet the 

performance standards in § 125.103. 

You, as the Director, may only approve 

a technology following public notice 

and consideration of comment regarding 

such approval. 

(5) Biennial Status Report. You must 

specify monitoring data and other 

information to be included in a status 

report every two years. The other 

information may include operation and 

maintenance records, summaries of 

adaptive management activities, or any 

other information that is relevant to 

determining compliance with the terms 

of the facility’s Technology Operation 

and Installation Plan and/or Restoration 

Plan.

§ 125.108 What are Approved Design and 

Construction Technologies? 

OPTION A FOR PARAGRAPH (a)—

[This language reflects the regulatory 

option that defines a Phase III existing 

facility as one with design intake 

flows of 50 MGD or more, located on 

any waterbody type or the regulatory 

option that defines a Phase III existing 

facility as one with design intake 

flows 200 MGD or more, located on 

any waterbody type]:

(a) The following technologies 

constitute approved design and 

construction technologies for purposes 

of § 125.103(a)(4): 

(1) Submerged cylindrical wedgewire 

screen technology, if you meet the 

following conditions: 

(i) Your cooling water intake structure 

is located in a freshwater river or 

stream; 

(ii) Your cooling water intake 

structure is situated such that sufficient 

ambient counter currents exist to 

promote cleaning of the screen face; 

(iii) Your maximum through-screen 

design intake velocity is 0.5 ft/s or less; 

(iv) The slot size is appropriate for the 

size of eggs, larvae, and juveniles of all 

68560 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

fish and shellfish to be protected at the 

site; and 

(v) Your entire main cooling water 

intake flow is directed through the 

technology. Small flows totaling less 

than 2 MGD for auxiliary cooling uses 

are excluded from this provision. 

(2) A technology that has been 

approved in accordance with the 

process described in paragraph (b) of 

this section.

OPTION B FOR PARAGRAPH (a)—

[This language reflects the regulatory 

option that defines a Phase III existing 

facility as one with design intake 

flows of 100 MGD or more, located on 

oceans, estuaries, tidal rivers, or one 

of the Great Lakes]:

(a) A design and construction 

technology may be approved for use in 

accordance with the compliance 

alternative in § 125.103(a)(4). The 

technology must be approved in 

accordance with the process described 

in paragraph (b) of this section. 

(b) You or any other interested person 

may submit a request to the Director 

that a technology be approved in 

accordance with the compliance 

alternative in § 125.103(a)(4) after 

providing the public with notice and an 

opportunity to comment on the request 

for approval of the technology. If the 

Director approves the technology, it may 

be used by all facilities with similar site 

conditions under the Director’s 

jurisdiction. Requests for approval of a 

technology must be submitted to the 

Director and include the following 

information: 

(1) A detailed description of the 

technology; 

(2) A list of design criteria for the 

technology and site characteristics and 

conditions that each facility must have 

in order to ensure that the technology 

can consistently meet the appropriate 

impingement mortality and entrainment 

performance standards in § 125.103(b); 

and 

(3) Information and data sufficient to 

demonstrate that facilities under the 

jurisdiction of the Director can meet the 

applicable impingement mortality and 

entrainment performance standards in 

§ 125.103(b) if the applicable design 

criteria and site characteristics and 

conditions are present at the facility.

3. Add subpart N to part 125 to read 

as follows:

Subpart N—Requirements Applicable to 

Cooling Water Intake Structures for New 

Offshore Oil and Gas Extraction Facilities 

Under Section 316(b) of the Act 

Sec. 

125.130 What are the purpose and scope of 

this subpart? 

125.131 Who is subject to this subpart? 

125.132 When must I comply with this 

subpart? 

125.133 What special definitions apply to 

this subpart? 

125.134 As an owner or operator of a new 

offshore oil and gas extraction facility, 

what must I do to comply with this 

subpart? 

125.135 May alternative requirements be 

authorized? 

125.136 As an owner or operator of a new 

offshore oil and gas extraction facility, 

what must I collect and submit when I 

apply for my new or reissued NPDES 

permit? 

125.137 As an owner or operator of a new 

offshore oil and gas extraction facility, 

must I perform monitoring? 

125.138 As an owner or operator of a new 

offshore oil and gas extraction facility, 

must I keep records and report? 

125.139 As the Director, what must I do to 

comply with the requirements of this 

subpart?

Subpart N—Requirements Applicable 

to Cooling Water Intake Structures for 

New Offshore Oil and Gas Extraction 

Facilities Under Section 316(b) of the 

Act

§ 125.130 What are the purpose and scope 

of this subpart? 

(a) This subpart establishes 

requirements that apply to the location, 

design, construction, and capacity of 

cooling water intake structures at new 

offshore oil and gas extraction facilities. 

The purpose of these requirements is to 

establish the best technology available 

for minimizing adverse environmental 

impact associated with the use of 

cooling water intake structures at these 

facilities. These requirements are 

implemented through National 

Pollutant Discharge Elimination System 

(NPDES) permits issued under section 

402 of the Clean Water Act (CWA). 

(b) This subpart implements section 

316(b) of the CWA for new offshore oil 

and gas extraction facilities. Section 

316(b) of the CWA provides that any 

standard established pursuant to 

sections 301 or 306 of the CWA and 

applicable to a point source shall 

require that the location, design, 

construction, and capacity of cooling 

water intake structures reflect the best 

technology available for minimizing 

adverse environmental impact. 

(c) New offshore oil and gas extraction 

facilities that do not meet the threshold 

requirements regarding amount of water 

withdrawn or percentage of water 

withdrawn for cooling water purposes 

in § 125.131(a) must meet requirements 

determined by the Director on a case-bycase, best professional judgement (BPJ) 

basis. 

(d) Nothing in this subpart shall be 

construed to preclude or deny the right 

of any State or political subdivision of 

a State or any interstate agency under 

section 510 of the CWA to adopt or 

enforce any requirement with respect to 

control or abatement of pollution that is 

more stringent than those required by 

Federal law.

§ 125.131 Who is subject to this subpart? 

(a) This subpart applies to a new 

offshore oil and gas extraction facility if 

it meets all of the following criteria: 

(1) It is a point source that uses or 

proposes to use a cooling water intake 

structure; 

(2) It has at least one cooling water 

intake structure that uses at least 25 

percent of the water it withdraws for 

cooling purposes as specified in 

paragraph (c) of this section; and 

(3) It has a design intake flow greater 

than two (2) million gallons per day 

(MGD). 

(b) Use of a cooling water intake 

structure includes obtaining cooling 

water by any sort of contract or 

arrangement with an independent 

supplier (or multiple suppliers) of 

cooling water if the supplier or 

suppliers withdraw(s) water from waters 

of the United States. Use of cooling 

water does not include obtaining 

cooling water from a public water 

system or the use of treated effluent that 

otherwise would be discharged to a 

water of the U.S. This provision is 

intended to prevent circumvention of 

these requirements by creating 

arrangements to receive cooling water 

from an entity that is not itself a point 

source. 

(c) The threshold requirement that at 

least 25 percent of water withdrawn be 

used for cooling purposes must be 

measured on an average monthly basis. 

A new offshore oil and gas extraction 

facility meets the 25 percent cooling 

water threshold if, based on the new 

facility’s design, any monthly average 

over a year for the percentage of cooling 

water withdrawn is expected to equal or 

exceed 25 percent of the total water 

withdrawn. 

(d) Neither this subpart nor Subpart I 

applies to seafood processing vessels 

and offshore liquefied natural gas 

import terminals that are new facilities 

as defined in 40 CFR 125.83. Seafood 

processing vessels and offshore 

liquefied natural gas import terminals 

must meet requirements established by 

the Director on a case-by-case, best 

professional judgment (BPJ) basis.

§ 125.132 When must I comply with this 

subpart? 

You must comply with this subpart 

when an NPDES permit containing 

requirements consistent with this 

subpart is issued to you.

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68561

§ 125.133 What special definitions apply to 

this subpart? 

The following special definitions 

apply to this subpart: 

Annual mean flow means the average 

of daily flows over a calendar year. 

Historical data (up to 10 years) must be 

used where available. 

Cooling water means water used for 

contact or noncontact cooling, including 

water used for equipment cooling, 

evaporative cooling tower makeup, and 

dilution of effluent heat content. The 

intended use of the cooling water is to 

absorb waste heat rejected from the 

process or processes used, or from 

auxiliary operations on the facility’s 

premises. Cooling water that is used in 

another industrial process either before 

or after it is used for cooling is 

considered process water for the 

purposes of calculating the percentage 

of a new offshore oil and gas extraction 

facility’s intake flow that is used for 

cooling purposes in § 125.131(c). 

Cooling water intake structure means 

the total physical structure and any 

associated constructed waterways used 

to withdraw cooling water from waters 

of the U.S. The cooling water intake 

structure extends from the point at 

which water is withdrawn from the 

surface water source up to, and 

including, the intake pumps. 

Design intake flow means the value 

assigned (during the facility’s design) to 

the total volume of water withdrawn 

from a source water body over a specific 

time period. 

Design intake velocity means the 

value assigned (during the design of a 

cooling water intake structure) to the 

average speed at which intake water 

passes through the open area of the 

intake screen (or other device) against 

which organisms might be impinged or 

through which they might be entrained. 

Entrainment means the incorporation 

of all life stages of fish and shellfish 

with intake water flow entering and 

passing through a cooling water intake 

structure and into a cooling water 

system.

Estuary means a semi-enclosed body 

of water that has a free connection with 

open seas and within which the 

seawater is measurably diluted with 

fresh water derived from land drainage. 

The salinity of an estuary exceeds 0.5 

parts per thousand (by mass) but is 

typically less than 30 parts per thousand 

(by mass). 

Fixed facility means a bottom founded 

offshore oil and gas extraction facility 

permanently attached to the seabed or 

subsoil of the outer continental shelf 

(e.g., platforms, guyed towers, 

articulated gravity platforms) or a 

buoyant facility securely and 

substantially moored so that it cannot be 

moved without a special effort (e.g., 

tension leg platforms, permanently 

moored semi-submersibles) and which 

is not intended to be moved during the 

production life of the well. This 

definition does not include mobile 

offshore drilling units (MODUs) (e.g., 

drill ships, temporarily moored semisubmersibles, jack-ups, submersibles, 

tender-assisted rigs, and drill barges). 

Hydraulic zone of influence means 

that portion of the source waterbody 

hydraulically affected by the cooling 

water intake structure withdrawal of 

water. 

Impingement means the entrapment 

of all life stages of fish and shellfish on 

the outer part of an intake structure or 

against a screening device during 

periods of intake water withdrawal. 

Maximize means to increase to the 

greatest amount, extent, or degree 

reasonably possible. 

Minimize means to reduce to the 

smallest amount, extent, or degree 

reasonably possible. 

Minimum ambient source water 

surface elevation means the mean low 

tidal water level for estuaries or oceans. 

The mean low tidal water level is the 

average height of the low water over at 

least 19 years. 

New offshore oil and gas extraction 

facility means any building, structure, 

facility, or installation that: 

(1) Meets the definition of a ‘‘new 

source’’ or ‘‘new discharger’’ in 40 CFR 

122.2 and 122.29(b)(1) and (4); 

(2) Is regulated by the Offshore and 

Coastal Subcategories of the Oil and Gas 

Extraction Point Source Category 

Effluent Guidelines in 40 CFR 435.10 or 

40 CFR 435.40; and 

(3) Commenced construction after [60 

days from publication of the final rule]. 

Ocean means marine open coastal 

waters with a salinity greater than or 

equal to 30 parts per thousand (by 

mass). 

Offshore liquefied natural gas (LNG) 

import terminal means any facility 

located in waters defined in 40 CFR 

435.10 or 40 CFR 435.40 that liquefies, 

re-gasifies, transfers, or stores liquefied 

natural gas. 

Sea chest means the underwater 

compartment or cavity within the 

facility or vessel hull or pontoon 

through which sea water is drawn in 

(for cooling and other purposes) or 

discharged. 

Seafood processing vessel means any 

offshore or nearshore, floating, mobile, 

facility engaged in the processing of 

fresh, frozen, canned, smoked, salted or 

pickled seafood, seafood paste, mince, 

or meal. 

Source water means the water body 

(waters of the U.S.) from which the 

cooling water is withdrawn. 

Tidal excursion means the horizontal 

distance along the estuary or tidal river 

that a particle moves during one tidal 

cycle of ebb and flow. 

Tidal river means the most seaward 

reach of a river or stream where the 

salinity is typically less than or equal to 

0.5 parts per thousand (by mass) at a 

time of annual low flow and whose 

surface elevation responds to the effects 

of coastal lunar tides.

§ 125.134 As an owner or operator of a 

new offshore oil and gas extraction facility, 

what must I do to comply with this subpart? 

(a)(1) The owner or operator of a new 

offshore oil and gas extraction facility 

must comply with: 

(i) Track I in paragraph (b) or Track 

II in paragraph (c) of this section, if it 

is a fixed facility; or 

(ii) Track I in paragraph (b) of this 

section, if it is not a fixed facility. 

(2) In addition to meeting the 

requirements in paragraph (b) or (c) of 

this section, the owner or operator of a 

new offshore oil and gas extraction 

facility may be required to comply with 

paragraph (d) of this section. 

(b) Track I requirements for new 

offshore oil and gas extraction facilities.

(1)(i) New offshore oil and gas 

extraction facilities that withdraw 

greater than 2 MGD, do not employ sea 

chests as cooling water intake 

structures, and are fixed facilities must 

comply with all of the requirements in 

paragraphs (b)(2) through (8) of this 

section. 

(ii) New offshore oil and gas 

extraction facilities that withdraw 

greater than 2 MGD, employ sea chests 

as cooling water intake structures, and 

are fixed facilities must comply with the 

requirements in paragraphs (b)(2), (3), 

(4), (6), (7), and (8) of this section. 

(iii) New offshore oil and gas 

extraction facilities that withdraw 

greater than 2 MGD and are not fixed 

facilities must comply with the 

requirements in paragraphs (b)(2), (4), 

(6), (7), and (8) of this section. 

(2) You must design and construct 

each cooling water intake structure at 

your facility to a maximum throughscreen design intake velocity of 0.5

ft/s; 

(3) For cooling water intake structures 

located in an estuary or tidal river, the 

total design intake flow over one tidal 

cycle of ebb and flow must be no greater 

than one (1) percent of the volume of 

the water column within the area 

centered about the opening of the intake 

with a diameter defined by the distance 

of one tidal excursion at the mean low 

water level; 

68562 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

(4) You must select and implement 

design and construction technologies or 

operational measures for minimizing 

impingement mortality of fish and 

shellfish if the Director determines that: 

(i) There are threatened or endangered 

or otherwise protected federal, state, or 

tribal species, or critical habitat for 

these species, within the hydraulic zone 

of influence of the cooling water intake 

structure; or 

(ii) Based on information submitted 

by any fishery management agency(ies) 

or other relevant information, there are 

migratory and/or sport or commercial 

species of impingement concern to the 

Director that pass through the hydraulic 

zone of influence of the cooling water 

intake structure; or

(iii) Based on information submitted 

by any fishery management agency(ies) 

or other relevant information, that the 

proposed facility, after meeting the 

technology-based performance 

requirements in paragraphs (b)(2) and 

(5) of this section, would still contribute 

unacceptable stress to the protected 

species, critical habitat of those species, 

or species of concern; 

(5) You must select and implement 

design and construction technologies or 

operational measures for minimizing 

entrainment of entrainable life stages of 

fish and shellfish; 

(6) You must submit the applicable 

application information required in 40 

CFR 122.21(r) and § 125.136(b). If you 

are a fixed facility you must submit the 

information required in 40 CFR 

122.21(r)(2) (except (r)(2)(iv)), (3), and 

(4) and § 125.136(b) of this subpart as 

part of your application. If you are a not 

a fixed facility, you must only submit 

the information required in 40 CFR 

122.21(r)(2)(iv), (r)(3) (except r(3)(ii)) 

and § 125.136(b) as part of your 

application. 

(7) You must implement the 

monitoring requirements specified in 

§ 125.137; 

(8) You must implement the 

recordkeeping requirements specified in 

§ 125.138. 

(c) Track II requirements for new 

offshore oil and gas extraction facilities.

The owner or operator of a new offshore 

oil and gas extraction facility that is a 

fixed facility and chooses to comply 

under Track II must comply with the 

following requirements: 

(1) You must demonstrate to the 

Director that the technologies employed 

will reduce the level of adverse 

environmental impact from your cooling 

water intake structures to a comparable 

level to that which you would achieve 

were you to implement the applicable 

requirements of paragraph (b)(2) and for 

fixed facilities without sea chests, 

paragraph (b)(5) of this section. This 

demonstration must include a showing 

that the impacts to fish and shellfish, 

including important forage and predator 

species will be comparable to those 

which would result if you were to 

implement the requirements of 

paragraph (b)(2) and for fixed facilities 

without sea chests, paragraph (b)(5) of 

this section. In identifying such species, 

the Director may consider information 

provided by any fishery management 

agency(ies) along with data and 

information from other sources. 

(2) For cooling water intake structures 

located in an estuary or tidal river, the 

total design intake flow over one tidal 

cycle of ebb and flow must be no greater 

than one (1) percent of the volume of 

the water column within the area 

centered about the opening of the intake 

with a diameter defined by the distance 

of one tidal excursion at the mean low 

water level. 

(3) You must submit the application 

information required in 40 CFR 

122.21(r) and § 125.136(c). 

(4) You must implement the 

monitoring requirements specified in 

§ 125.137. 

(5) You must implement the recordkeeping requirements specified in 

§ 125.138. 

(d) You must comply with any more 

stringent requirements relating to the 

location, design, construction, and 

capacity of a cooling water intake 

structure or monitoring requirements at 

a new offshore oil and gas extraction 

facility that the Director deems are 

reasonably necessary to comply with 

any provision of Federal or State law, 

including compliance with applicable 

state water quality standards (including 

designated uses, criteria, and 

antidegradation requirements).

§ 125.135 May alternative requirements be 

authorized? 

(a) Any interested person may request 

that alternative requirements less 

stringent than those specified in 

§ 125.134(a) through (d) be imposed in 

the permit. The Director may establish 

alternative requirements less stringent 

than the requirements of § 125.134(a) 

through (d) only if: 

(1) There is an applicable requirement 

under § 125.134(a) through (d); 

(2) The Director determines that data 

specific to the facility indicate that 

compliance with the requirement at 

issue would result in compliance costs 

wholly out of proportion to the costs 

EPA considered in establishing the 

requirement at issue or would result in 

significant adverse impacts on local 

water resources other than impingement 

or entrainment, or significant adverse 

impacts on energy markets; 

(3) The alternative requirement 

requested is no less stringent than 

justified by the wholly out of proportion 

cost or the significant adverse impacts 

on local water resources other than 

impingement or entrainment, or 

significant adverse impacts on energy 

markets; and 

(4) The alternative requirement will 

ensure compliance with other 

applicable provisions of the Clean Water 

Act and any applicable requirement of 

Federal or State law. 

(b) The burden is on the person 

requesting the alternative requirement 

to demonstrate that alternative 

requirements should be authorized.

§ 125.136 As an owner or operator of a 

new offshore oil and gas extraction facility, 

what must I collect and submit when I apply 

for my new or reissued NPDES permit? 

(a)(1) As an owner or operator of a 

new offshore oil and gas extraction 

facility, you must submit to the Director 

a statement that you intend to comply 

with either: 

(i) The Track I requirements for new 

offshore oil and gas extraction facilities 

in § 125.134(b); or 

(ii) If you are a fixed facility, the 

Track II requirements in § 125.134(c). 

(2) You must also submit the 

application information required by 40 

CFR 122.21(r) and the information 

required in either paragraph (b) of this 

section for Track I or, if you are a fixed 

facility that chooses to comply under 

Track II, paragraph (c) of this section for 

Track II when you apply for a new or 

reissued NPDES permit in accordance 

with 40 CFR 122.21. 

(b) Track I application requirements.

To demonstrate compliance with Track 

I requirements in § 125.134(b), you must 

collect and submit to the Director the 

information in paragraphs (b)(1) through 

(3) of this section. 

(1) Velocity information. You must 

submit the following information to the 

Director to demonstrate that you are 

complying with the requirement to meet 

a maximum through-screen design 

intake velocity of no more than 0.5

ft/s at each cooling water intake 

structure as required in § 125.134(b)(2): 

(i) A narrative description of the 

design, structure, equipment, and 

operation used to meet the velocity 

requirement; and 

(ii) Design calculations showing that 

the velocity requirement will be met at 

minimum ambient source water surface 

elevations (based on best professional 

judgment using available hydrological 

data) and maximum head loss across the 

screens or other device. 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68563

(2) Source waterbody flow 

information. If you are a fixed facility 

and your cooling water intake structure 

is located in an estuary or tidal river, 

you must provide the mean low water 

tidal excursion distance and any 

supporting documentation and 

engineering calculations to show that 

your cooling water intake structure 

facility meets the flow requirements in 

§ 125.134(b)(3). 

(3) Design and Construction 

Technology Plan. To comply with 

§ 125.134(b)(4) and/or (5), if applicable, 

you must submit to the Director the 

following information in a Design and 

Construction Technology Plan: 

(i) If the Director determines that 

additional impingement requirements 

should be included in your permit: 

(A) Information to demonstrate 

whether or not you meet the criteria in 

§ 125.134(b)(4); 

(B) Delineation of the hydraulic zone 

of influence for your cooling water 

intake structure;

(ii) New offshore oil and gas 

extraction facilities required to install 

design and construction technologies 

and/or operational measures must 

develop a plan explaining the 

technologies and measures you have 

selected. (Examples of appropriate 

technologies include, but are not limited 

to, increased opening to cooling water 

intake structure to decrease design 

intake velocity, wedgewire screens, 

fixed screens, velocity caps, location of 

cooling water intake opening in 

waterbody, etc. Examples of appropriate 

operational measures include, but are 

not limited to, seasonal shutdowns or 

reductions in flow, continuous 

operations of screens, etc.) The plan 

must contain the following information, 

if applicable: 

(A) A narrative description of the 

design and operation of the design and 

construction technologies, including 

fish-handling and return systems, that 

you will use to maximize the survival of 

those species expected to be most 

susceptible to impingement. Provide 

species-specific information that 

demonstrates the efficacy of the 

technology; 

(B) To demonstrate compliance with 

125.134(b)(5), if applicable, a narrative 

description of the design and operation 

of the design and construction 

technologies that you will use to 

minimize entrainment of those species 

expected to be the most susceptible to 

entrainment. Provide species-specific 

information that demonstrates the 

efficacy of the technology; and 

(C) Design calculations, drawings, and 

estimates to support the descriptions 

provided in paragraphs (b)(3)(iii)(A) and 

(B) of this section. 

(c) Application requirements for 

Track II. If you are a fixed facility and 

have chosen to comply with the 

requirements of Track II in § 125.134(c) 

you must collect and submit the 

following information: 

(1) Source waterbody flow 

information. If your cooling water intake 

structure is located in an estuary or tidal 

river, you must provide the mean low 

water tidal excursion distance and any 

supporting documentation and 

engineering calculations to show that 

your cooling water intake structure 

facility meets the flow requirements in 

§ 125.134(c)(2); 

(2) Track II Comprehensive 

Demonstration Study. You must 

perform and submit the results of a 

Comprehensive Demonstration Study 

(Study). This information is required to 

characterize the source water baseline in 

the vicinity of the cooling water intake 

structure(s), characterize operation of 

the cooling water intake(s), and to 

confirm that the technology(ies) 

proposed and/or implemented at your 

cooling water intake structure reduce 

the impacts to fish and shellfish to 

levels comparable to those you would 

achieve were you to implement the 

applicable requirements in § 125.134(b) 

(i) To meet the ‘‘comparable level’’

requirement, you must demonstrate 

that: 

(A) You have reduced impingement 

mortality of all life stages of fish and 

shellfish to 90 percent or greater of the 

reduction that would be achieved 

through the applicable requirements in 

§ 125.134(b)(2); and 

(B) If you are a facility without sea 

chests, you have minimized 

entrainment of entrainable life stages of 

fish and shellfish in accordance with 

§ 125.134(b)(5); 

(ii) You must develop and submit a 

plan to the Director containing a 

proposal for how information will be 

collected to support the study. The plan 

must include: 

(A) A description of the proposed 

and/or implemented technology(ies) to 

be evaluated in the Study; 

(B) A list and description of any 

historical studies characterizing the 

physical and biological conditions in 

the vicinity of the proposed or actual 

intakes and their relevancy to the 

proposed Study. If you propose to rely 

on existing source water body data, it 

must be no more than 5 years old, you 

must demonstrate that the existing data 

are sufficient to develop a scientifically 

valid estimate of potential impingement 

mortality and (if applicable) 

entrainment impacts, and provide 

documentation showing that the data 

were collected using appropriate quality 

assurance/quality control procedures; 

(C) Any public participation or 

consultation with Federal or State 

agencies undertaken in developing the 

plan; and 

(D) A sampling plan for data that will 

be collected using actual field studies in 

the source water body. The sampling 

plan must document all methods and 

quality assurance procedures for 

sampling, and data analysis. The 

sampling and data analysis methods you 

propose must be appropriate for a 

quantitative survey and based on 

consideration of methods used in other 

studies performed in the source water 

body. The sampling plan must include 

a description of the study area 

(including the area of influence of the 

cooling water intake structure and at 

least 100 meters beyond); taxonomic 

identification of the sampled or 

evaluated biological assemblages 

(including all life stages of fish and 

shellfish); and sampling and data 

analysis methods; and 

(iii) You must submit documentation 

of the results of the Study to the 

Director. Documentation of the results 

of the Study must include: 

(A) Source Water Biological Study.

The Source Water Biological Study must 

include: 

(1) A taxonomic identification and 

characterization of aquatic biological 

resources including: a summary of 

historical and contemporary aquatic 

biological resources; determination and 

description of the target populations of 

concern (those species of fish and 

shellfish and all life stages that are most 

susceptible to impingement and 

entrainment); and a description of the 

abundance and temporal/spatial 

characterization of the target 

populations based on the collection of 

multiple years of data to capture the 

seasonal and daily activities (e.g., 

spawning, feeding and water column 

migration) of all life stages of fish and 

shellfish found in the vicinity of the 

cooling water intake structure; 

(2) An identification of all threatened 

or endangered species that might be 

susceptible to impingement and 

entrainment by the proposed cooling 

water intake structure(s); and 

(3) A description of additional 

chemical, water quality, and other 

anthropogenic stresses on the source 

waterbody. 

(B) Evaluation of potential cooling 

water intake structure effects. This 

evaluation will include: 

(1) Calculations of the reduction in 

impingement mortality and, if 

applicable, entrainment of all life stages 

68564 Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 

of fish and shellfish that would need to 

be achieved by the technologies you 

have selected to implement to meet 

requirements under Track II. To do this, 

you must determine the reduction in 

impingement mortality and entrainment 

that would be achieved by 

implementing the requirements of 

§ 125.134(b)(2) and, for facilities 

without sea chests, § 125.134(b)(5) of 

Track I at your site. 

(2) An engineering estimate of efficacy 

for the proposed and/or implemented 

technologies used to minimize 

impingement mortality and (if 

applicable) entrainment of all life stages 

of fish and shellfish and maximize 

survival of impinged life stages of fish 

and shellfish. You must demonstrate 

that the technologies reduce 

impingement mortality and (if 

applicable) entrainment of all life stages 

of fish and shellfish to a comparable 

level to that which you would achieve 

were you to implement the 

requirements in § 125.134(b)(2) and, for 

facilities without sea chests, 

§ 125.134(b)(5) of Track I. The efficacy 

projection must include a site-specific 

evaluation of technology(ies) suitability 

for reducing impingement mortality and 

(if applicable) entrainment based on the 

results of the Source Water Biological 

Study in paragraph (c)(2)(iv)(A) of this 

section. Efficacy estimates may be 

determined based on case studies that 

have been conducted in the vicinity of 

the cooling water intake structure and/

or site-specific technology prototype 

studies.

(C) Verification monitoring plan. You 

must include in the Study a plan to 

conduct, at a minimum, two years of 

monitoring to verify the full-scale 

performance of the proposed or 

implemented technologies, operational 

measures. The verification study must 

begin at the start of operations of the 

cooling water intake structure and 

continue for a sufficient period of time 

to demonstrate that the facility is 

reducing the level of impingement 

mortality and (if applicable) 

entrainment to the level documented in 

paragraph (c)(2)(iii)(B) of this section. 

The plan must describe the frequency of 

monitoring and the parameters to be 

monitored. The Director will use the 

verification monitoring to confirm that 

you are meeting the level of 

impingement mortality and entrainment 

reduction required in § 125.134(c), and 

that the operation of the technology has 

been optimized.

§ 125.137 As an owner or operator of a 

new offshore oil and gas extraction facility, 

must I perform monitoring? 

As an owner or operator of a new 

offshore oil and gas extraction facility, 

you will be required to perform 

monitoring to demonstrate your 

compliance with the requirements 

specified in § 125.134 or alternative 

requirements under § 125.135. 

(a) Biological monitoring. (1)(i) Fixed 

facilities without sea chests that choose 

to comply with the Track I requirements 

in § 125.134(b)(1)(i) must monitor for 

entrainment. These facilities are not 

required to monitor for impingement, 

unless the Director determines that the 

information would be necessary to 

evaluate the need for or compliance 

with additional requirements in 

accordance with § 125.134(b)(4) or more 

stringent requirements in accordance 

with § 125.134(d). 

(ii) Fixed facilities with sea chests 

that choose to comply with Track I 

requirements are not required to 

perform biological monitoring unless 

the Director determines that the 

information would be necessary to 

evaluate the need for or compliance 

with additional requirements in 

accordance with § 125.134(b)(4) or more 

stringent requirements in accordance 

with § 125.134(d). 

(iii) Facilities that are not fixed 

facilities are not required to perform 

biological monitoring unless the 

Director determines that the information 

would be necessary to evaluate the need 

for or compliance with additional 

requirements in accordance with 

§ 125.134(b)(4) or more stringent 

requirements in accordance with 

§ 125.134(d). 

(iv) Fixed facilities with sea chests 

that choose to comply with Track II 

requirements in accordance with 

§ 125.134(c), must monitor for 

impingement only. Fixed facilities 

without sea chests, must monitor for 

both impingement and entrainment. 

(2) Monitoring must characterize the 

impingement rates and (if applicable) 

entrainment rates of commercial, 

recreational, and forage base fish and 

shellfish species identified in the 

Source Water Baseline Biological 

Characterization data required by 40 

CFR 122.21(r)(4), identified in the 

Comprehensive Demonstration Study 

required by § 125.136(c)(2), or as 

specified by the Director. 

(3) The monitoring methods used 

must be consistent with those used for 

the Source Water Baseline Biological 

Characterization data required in 40 

CFR 122.21(r)(4), those used by the 

Comprehensive Demonstration Study 

required by § 125.136(c)(2), or as 

specified by the Director. You must 

follow the monitoring frequencies 

identified below for at least two (2) 

years after the initial permit issuance. 

After that time, the Director may 

approve a request for less frequent 

sampling in the remaining years of the 

permit term and when the permit is 

reissued, if supporting data show that 

less frequent monitoring would still 

allow for the detection of any seasonal 

and daily variations in the species and 

numbers of individuals that are 

impinged or entrained. 

(4) Impingement sampling. You must 

collect samples to monitor impingement 

rates (simple enumeration) for each 

species over a 24-hour period and no 

less than once per month when the 

cooling water intake structure is in 

operation. 

(5) Entrainment sampling. If your 

facility is subject to the requirements of 

§ 125.134(b)(1)(i) or (c), you must collect 

samples to monitor entrainment rates 

(simple enumeration) for each species 

over a 24-hour period and no less than 

biweekly during the primary period of 

reproduction, larval recruitment, and 

peak abundance identified during the 

Source Water Baseline Biological 

Characterization required by 40 CFR 

122.21(r)(4) or the Comprehensive 

Demonstration Study required in 

§ 125.136(c)(2). You must collect 

samples only when the cooling water 

intake structure is in operation. 

(b) Velocity monitoring. If your 

facility uses a surface intake screen 

systems, you must monitor head loss 

across the screens and correlate the 

measured value with the design intake 

velocity. The head loss across the intake 

screen must be measured at the 

minimum ambient source water surface 

elevation (best professional judgment 

based on available hydrological data). 

The maximum head loss across the 

screen for each cooling water intake 

structure must be used to determine 

compliance with the velocity 

requirement in § 125.134(b)(2). If your 

facility uses devices other than surface 

intake screens, you must monitor 

velocity at the point of entry through the 

device. You must monitor head loss or 

velocity during initial facility startup, 

and thereafter, at the frequency 

specified in your NPDES permit, but no 

less than once per quarter.

(c) Visual or remote inspections. You 

must either conduct visual inspections 

or employ remote monitoring devices 

during the period the cooling water 

intake structure is in operation. You 

must conduct visual inspections at least 

weekly to ensure that any design and 

construction technologies required in 

§ 125.134(b)(4), (b)(5), (c), and/or (d) are 

Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / Proposed Rules 68565

maintained and operated to ensure that 

they will continue to function as 

designed. Alternatively, you must 

inspect via remote monitoring devices 

to ensure that the impingement and 

entrainment technologies are 

functioning as designed.

§ 125.138 As an owner or operator of a 

new offshore oil and gas extraction facility, 

must I keep records and report? 

As an owner or operator of a new 

offshore oil and gas extraction facility 

you are required to keep records and 

report information and data to the 

Director as follows: 

(a) You must keep records of all the 

data used to complete the permit 

application and show compliance with 

the requirements, any supplemental 

information developed under § 125.136, 

and any compliance monitoring data 

submitted under § 125.137, for a period 

of at least three (3) years from the date 

of permit issuance. The Director may 

require that these records be kept for a 

longer period. 

(b) You must provide the following to 

the Director in a yearly status report: 

(1) For fixed facilities, biological 

monitoring records for each cooling 

water intake structure as required by 

§ 125.137(a); 

(2) Velocity and head loss monitoring 

records for each cooling water intake 

structure as required by § 125.137(b); 

and 

(3) Records of visual or remote 

inspections as required in § 125.137(c).

§ 125.139 As the Director, what must I do 

to comply with the requirements of this 

subpart? 

(a) Permit application. As the 

Director, you must review materials 

submitted by the applicant under 40 

CFR 122.21(r), § 125.135, and § 125.136 

at the time of the initial permit 

application and before each permit 

renewal or reissuance. 

(1) After receiving the initial permit 

application from the owner or operator 

of a new offshore oil and gas extraction 

facility, the Director must determine 

applicable standards in § 125.134 or 

§ 125.135 to apply to the new offshore 

oil and gas extraction facility. In 

addition, the Director must review 

materials to determine compliance with 

the applicable standards. 

(2) For each subsequent permit 

renewal, the Director must review the 

application materials and monitoring 

data to determine whether 

requirements, or additional 

requirements, for design and 

construction technologies or operational 

measures should be included in the 

permit. 

(3) For Track II facilities, the Director 

may review the information collection 

proposal plan required by 

§ 125.136(c)(2)(ii). The facility may 

initiate sampling and data collection 

activities prior to receiving comment 

from the Director. 

(b) Permitting requirements. Section 

316(b) requirements are implemented 

for a facility through an NPDES permit. 

As the Director, you must determine, 

based on the information submitted by 

the new offshore oil and gas extraction 

facility in its permit application, the 

appropriate requirements and 

conditions to include in the permit 

based on the track (Track I or Track II), 

or alternative requirements in 

accordance with § 125.135, the new 

offshore oil and gas extraction facility 

has chosen to comply with. The 

following requirements must be 

included in each permit: 

(1) Cooling water intake structure 

requirements. At a minimum, the permit 

conditions must include the 

performance standards that implement 

the applicable requirements of 

§ 125.134(b)(2), (3), (4) and (5); 

§ 125.134(c)(1) and (2); or § 125.135. 

(i) For a facility that chooses Track I, 

you must review the Design and 

Construction Technology Plan required 

in § 125.136(b)(3) to evaluate the 

suitability and feasibility of the 

technology proposed to minimize 

impingement mortality and (if 

applicable) entrainment of all life stages 

of fish and shellfish. In the first permit 

issued, you must include a condition 

requiring the facility to reduce 

impingement mortality and/or 

entrainment commensurate with the 

implementation of the technologies in 

the permit. Under subsequent permits, 

the Director must review the 

performance of the technologies 

implemented and require additional or 

different design and construction 

technologies, if needed to minimize 

impingement mortality and/or 

entrainment of all life stages of fish and 

shellfish. In addition, you must consider 

whether more stringent conditions are 

reasonably necessary in accordance 

with § 125.134(d). 

(ii) For a fixed facility that chooses 

Track II, you must review the 

information submitted with the 

Comprehensive Demonstration Study 

information required in § 125.136(c)(2), 

evaluate the suitability of the proposed 

design and construction technology 

and/or operational measures to 

determine whether they will reduce 

both impingement mortality and/or 

entrainment of all life stages of fish and 

shellfish to 90 percent or greater of the 

reduction that could be achieved 

through Track I. In addition, you must 

review the Verification Monitoring Plan 

in § 125.136(c)(2)(iii)(C) and require that 

the proposed monitoring begin at the 

start of operations of the cooling water 

intake structure and continue for a 

sufficient period of time to demonstrate 

that the technologies and operational 

measures meet the requirements in 

§ 125.134(c)(1). Under subsequent 

permits, the Director must review the 

performance of the additional and/or 

different technologies or measures used 

and determine that they reduce the level 

of adverse environmental impact from 

the cooling water intake structures to a 

comparable level that the facility would 

achieve were it to implement the 

requirements of § 125.134(b)(2) and, if 

applicable, § 125.134(b)(5). 

(iii) If a facility requests alternative 

requirements in accordance with 

§ 125.135, you must determine if data 

specific to the facility meet the 

requirements in § 125.135(a) and 

include in the permit requirements that 

are no less stringent than justified by the 

wholly out of proportion cost or the 

significant adverse impacts on local 

water resources other than impingement 

or entrainment, or significant adverse 

impacts on energy markets. 

(2) Monitoring conditions. At a 

minimum, the permit must require the 

permittee to perform the monitoring 

required in § 125.137. You may modify 

the monitoring program when the 

permit is reissued and during the term 

of the permit based on changes in 

physical or biological conditions in the 

vicinity of the cooling water intake 

structure. The Director may require 

continued monitoring based on the 

results of the Verification Monitoring 

Plan in § 125.136(c)(2)(iii)(C). 

(3) Record keeping and reporting. At 

a minimum, the permit must require the 

permittee to report and keep records as 

required by § 125.138.

[FR Doc. 04–24913 Filed 11–23–04; 8:45 am] 

BILLING CODE 6560–50–P