May 16, 2014 Abt Associates | Costs for Alternative Regulatory Option 4 Cases and Final Rule | pg 1

Date May 16, 2014

To The Final Section 316(b) Existing Facilities Rule Record

From Abt Associates

Subject Comparison of Social Costs for Alternative Regulatory Option 4 Cases and Final Rule

1 Overview

As described in Chapter 1 of the Economic Analysis for the Final Section 316(b) Existing Facilities Rule

(EA), in addition to analyzing the final rule, EPA considered and analyzed two more options for existing 

units. In the EA for the final rule, EPA refers to these additional options as Proposal Option 4 and 

Proposal Option 2 because they are based on Options 4 and 2, as defined in the proposed rule EA, in 

terms of the design intake flow (DIF) specifications of a cooling water intake system that would be 

subject to given technology requirements. Specifically, Proposal Option 4, as analyzed in the final rule 

EA, requires regulated facilities with a DIF of greater than 50 MGD to achieve the uniform national 

impingement mortality standards while existing units with DIF between 2 and 50 MGD would remain 

subject to 316(b) permitting based on best professional judgment. This is the same applicability 

specification as for Option 4 in the proposed rule EA. However, the final rule EA’s Option 4 (Proposal 

Option 4) differs from the proposed rule EA’s Option 4 in that the final rule EA’s Option 4 incorporates 

the flexibilities and additional cost-reduction measures that are included in the final rule. 

To provide a more consistent comparison of Option 4, as defined at proposal, with the final rule, EPA 

defined and analyzed an alternative to the final rule EA’s Option 4 (herein referred to as Alternative

Option 4), which does not incorporate the flexibilities and additional cost-reduction measures that are 

included in the final rule and in the final rule EA’s Option 4. This Alternative Option 4 retains the 

regulatory specifications of the proposed rule in terms of technology choice and applicability based on 

DIF coverage, but adjusts technology costs to the current dollar year and used the updated framework of 

administrative requirements. 

EPA’s analysis of the social costs and benefits of the final rule and other options EPA considered, as 

described in EA Chapter 8: Social Costs and Benefits, assumes that all facilities with cooling water 

system impoundments will qualify as baseline closed-cycle recirculating system (CCRS), and will not 

need to install additional technology under the final rule and other options considered. EPA’s analysis of 

the social costs and benefits presented in this memorandum also reflects this assumption. To the extent 

that some of these facilities do not qualify as baseline CCRS and would need to install additional 

compliance technology, the social costs and benefits reported in this memorandum may be 

underestimates.1

As discussed in the EA, under the final rule’s new units provision, entrainment control measures are 

required for stand-alone new units. In developing this provision, EPA considered three additional

options – A, B, and C– which, in addition to covering stand-alone new units, extend the new units 

provision to specific definitions of repowered units. This memorandum discusses only the final rule’s new 

units provision. 

 

1

For a more complete discussion of the Impoundments Provision and assumptions EPA made for its analysis, please see EA

Chapter 1: Introduction.

Memorandum

Environment and Resources
May 16, 2014 Abt Associates | Costs for Alternative Regulatory Option 4 Cases and Final Rule | pg 2

Below, EPA compares the social cost of existing units provision of Alternative Option 4 to the costs of 

the existing units provisions of the final rule and to the final rule EA’s Option 4 (Proposal Option 4)

(Section 2). EPA also presents costs for the new units provision of the final rule (Section 3), and compares 

the total social cost of Alternative Option 4, including both the existing and new units provisions, to the 

total social costs of the final rule and Proposal Option 4, also including the existing and new units

provisions. The differences between the cost for Alternative Option 4 and the options considered in the 

EA reflect the final rule’s flexibilities and additional cost-reduction measures.

2 Total Social Costs for Existing Units

This section presents and compares social costs associated with existing units only. Table 2-1 reports 

annualized direct compliance costs to existing units at regulated facilities. The cost of Alternative Option 

4 is $280.8 million at the 3-percent discount rate and $306.3 million at the 7-percent discount rate. At the 

3-percent discount rate, the cost of Alternative Option 4 is 3 percent higher than the cost of the existing 

units provision of the final rule, and 12 percent higher than the cost of Proposal Option 4. At the 7-percent 

discount rate, the cost of Alternative Option 4 is 4 percent higher than the cost of the existing units 

provision of the final rule and 13 percent higher than the cost of Proposal Option 4.

Table 2-1: Annualized Direct Compliance Costs for Final Rule and Alternative Definitions of 

Option 4 – Existing Units Provisions Only (Millions; $2011; at 2013)

Discount Rate Alternative Option 4 Final Rule-Existing Units Proposal Option 4 

3% $280.8 $271.4 $250.7

7% $306.3 $294.3 $271.1

Source: U.S. EPA analysis for this memorandum

Table 2-2 reports the annualized costs to States and the federal government for administering the existing 

units provision of the final rule and the alternative definitions of Option 4. These costs are the same for 

Alternative Option 4, Proposal Option 4, and the final rule. As mentioned above, Alternative Option 4 

reflects updates made to the framework of administrative requirements and therefore has the same 

administrative costs to governments as the final rule and Proposal Option 4. States would incur 

annualized costs of $1.0 million, at both the 3-percent and 7-percent discount rates, while the federal 

government would incur annualized administrative costs of less than $40,000. 

Table 2-2: Annualized Government Administrative Costs for Final Rule and Alternative Definitions 

of Option 4 – Existing Units Provisions Only (Millions; $2011; at 2013)

Discount Rate Government Level Alternative Option 4 Final Rule-Existing Units Proposal Option 4 

3%

State/Territory $1.0 $1.0 $1.0

Federalb$0.0 $0.0 $0.0

Totala$1.0 $1.0 $1.0

7%

State/Territory $1.0 $1.0 $1.0

Federalb$0.0 $0.0 $0.0

Totala$1.0 $1.0 $1.0

a. Values may not sum to totals due to independent rounding.

b. The value is less than $40,000.

Source: U.S. EPA analysis for this memorandum

Table 2-3 presents total social costs for the existing units provisions of the final rule and the alternative 

definitions of Option 4. At the 3-percent discount rate, the total social cost of Alternative Option 4 is 

$281.8 million, which exceeds the cost of the existing units provision of the final rule by $9.4 million and 

the cost of Proposal Option 4 by $30.0 million. At the 7-percent discount rate, the total social cost of 
May 16, 2014 Abt Associates | Costs for Alternative Regulatory Option 4 Cases and Final Rule | pg 3

Alternative Option 4 is $307.3 million, $12.1 million higher than the cost of the existing units provision 

of the final rule and $35.2 million higher than the cost of Proposal Option 4.

Table 2-3: Annualized Total Social Costs for Final Rule and Alternative Definitions of Option 4 –

Existing Units Provisions Only (Millions; $2011; at 2013)

Discount Rate Cost Category Alternative Option 4 Final Rule-Existing Units Proposal Option 4 

3%

Compliance Cost $280.8 $271.4 $250.7

Gov. Admin. $1.0 $1.0 $1.0

Totala$281.8 $272.4 $251.8

7%

Compliance Cost $306.3 $294.3 $271.1

Gov. Admin. $1.0 $1.0 $1.0

Totala$307.3 $295.3 $272.1

a. Values may not sum to totals due to independent rounding.

Source: U.S. EPA analysis for this memorandum

3 Total Social Costs for New Units

Table 3-1 presents annualized direct compliance costs for new units to Electric Generators and annualized 

administrative costs to States and the federal government under the new units provision of the final rule. 

EPA assumed that all new units activity will occur in States with NPDES permitting authority. As 

reported in Table 3-1, EPA estimates that under the new units provision of the final rule, direct 

compliance costs to facilities will be $2.5 million at the 3-percent discount rate and $1.9 million at the 7-

percent discount rate. States will incur approximately $0.1 million to administer the new units provision 

of the final rule, regardless of the discount rate. The total social cost of the new units provision of the final 

rule will be $2.6 million at the 3-percent discount rate and $2.0 million at the 7-percent discount rate.

Table 3-1: Summary of Annualized Direct Compliance Costs 

to Facilities and Administrative Costs to the Government –

New Units Provision Only (Millions; $2011; at 2013)

Discount Rate Cost Category Costs

3%

Compliance Costs $2.5 

Gov. Admin. $0.1 

Total $2.6 

7%

Compliance Costs $1.9 

Gov. Admin. $0.1 

Total $2.0 

Source: U.S. EPA analysis for this memorandum

4 Total Social Costs for Existing and New Units

This section presents and compares social costs associated with both existing and new units. Table 4-1

reports annualized direct compliance costs for the existing and new units provisions. The cost of 

Alternative Option 4 is $283.2 million at the 3-percent discount rate and $308.3 million at the 7-percent 

discount rate. At the 3-percent discount rate, the cost of Alternative Option 4 is approximately 3 percent 

higher than the cost of the final rule, and 12 percent higher than the cost of Proposal Option 4. At the 7-

percent discount rate, the cost of Alternative Option 4 is 4 percent higher than the cost of the final rule 

and approximately 13 percent higher than the cost of Proposal Option 4.
May 16, 2014 Abt Associates | Costs for Alternative Regulatory Option 4 Cases and Final Rule | pg 4

Table 4-1: Annualized Direct Compliance Costs for Final Rule and Alternative Definitions of 

Option 4 – Existing Units and New Units Provisions (Millions; $2011; at 2013)

Discount 

Rate

New Units Existing Units Totala

Final Rule

Alternative 

Option 4 Final Rule

Proposal 

Option 4

Alternative 

Option 4 Final Rule

Proposal 

Option 4

3% $2.5 $280.8 $271.4 $250.7 $283.2 $273.8 $253.2

7% $1.9 $306.3 $294.3 $271.1 $308.3 $296.2 $273.1

a. Values may not sum to totals due to independent rounding.

Source: U.S. EPA analysis for this memorandum

Table 4-2 reports the annualized costs to States and federal government for administering the existing and 

new units provisions of the final rule and the alternative definitions of Option 4. These costs are 

approximately the same for Alternative Option 4, Proposal Option 4, and the final rule – $1.1 million 

regardless of the discount rate. As stated above, EPA assumed that all new units activity will occur in 

States with NPDES permitting authority.

Table 4-2: Annualized Government Administrative Costs for Final Rule and Alternative 

Definitions of Option 4 – Existing Units and New Units Provisions (Millions; $2011; at 

2013)

Discount 

Rate

Government 

Level

New 

Units Existing Units Existing and New Units

Final 

Rule

Alternative 

Option 4

Final 

Rule

Proposal 

Option 4

Alternative 

Option 4

Final 

Rule

Proposal 

Option 4

3%

State/Territory $0.1 $1.0 $1.0 $1.0 $1.1 $1.1 $1.1

Federala$0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0

Totalb$0.1 $1.0 $1.0 $1.0 $1.1 $1.1 $1.1

7%

State/Territory $0.1 $1.0 $1.0 $1.0 $1.1 $1.1 $1.1

Federala$0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0

Totalb$0.1 $1.0 $1.0 $1.0 $1.1 $1.1 $1.1

a. The value is less than $40,000.

b. Values may not sum to totals due to independent rounding.

Source: U.S. EPA analysis for this memorandum

Table 4-3 presents total social costs for the existing and new units provisions of the final rule and the 

alternative definitions of Option 4. At the 3-percent discount rate, the total social cost of Alternative 

Option 4 is $284.3 million, which exceeds the total social cost of the final rule by $9.4 million and the 

total social cost of Proposal Option 4 by $30.0 million. At the 7-percent discount rate, the total social cost 

of Alternative Option 4 is $309.3 million, which is $12.1 million higher than the total social cost of the 

final rule and $35.2 million higher than the total social cost of Proposal Option 4.

Table 4-3: Annualized Total Social Costs for Final Rule and Alternative Definitions of 

Option 4 – Existing Units and New Units Provisions (Millions; $2011; at 2013)

Discount 

Rate Cost Category

New 

Units Existing Units Existing and New Units

Final 

Rule

Alternative 

Option 4

Final 

Rule

Proposal 

Option 4

Alternative 

Option 4

Final 

Rule

Proposal 

Option 4

3%

Compliance Cost $2.5 $280.8 $271.4 $250.7 $283.2 $273.8 $253.2

Gov. Admin. $0.1 $1.0 $1.0 $1.0 $1.1 $1.1 $1.1 

Totala$2.6 $281.8 $272.4 $251.8 $284.3 $274.9 $254.3

7%

Compliance Cost $1.9 $306.3 $294.3 $271.1 $308.3 $296.2 $273.1

Gov. Admin. $0.1 $1.0 $1.0 $1.0 $1.1 $1.1 $1.1 

Totala$2.0 $307.3 $295.3 $272.1 $309.3 $297.3 $274.1

a. Values may not sum to totals due to independent rounding.

Source: U.S. EPA analysis for this memorandum