WASHINGTON, D.C. 20460 \10 S1.

- UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

The Honorable E. Benjamin Nelson

United States Senate Washington, D.C. 20510

Dear Senator Nelson:

Thank you for your letter of August 6, 2012, to the U.S. Environmental Protection Agency (EPA) Administrator Lisa P. Jackson regarding the proposed rule for cooling water intake structures that the EPA published in April 2011. During the public comment period for the proposed rule, we received many comments on how to make national standards work better for the diverse community of interests, including more than 1200 industrial facilities, state permitting authorities, and commercial and recreational fishermen. Your letter reflects some of the concerns we heard during the public comment period. The EPA is carefully considering the comments and new data we have received from the regulated community and other stakeholders as it works toward a final rule. As the senior policy manager of the EPA's national water program, I am pleased to respond to your letter on behalf of Administrator Jackson.

The proposed rule would establish national standards under section 316(b) of the Clean Water Act for certain existing power plants and manufacturing facilities. Under the Clean Water Act, section 316(b) standards must reflect the best technology available for "minimizing adverse environmental impact." The proposed rule seeks to minimize adverse environmental impact through standards that protect aquatic organisms from death and injury resulting from the withdrawal of water by cooling water intake structures. The largest power plants and manufacturing facilities in the United States (that each withdraw at least two million gallons per day) cumulatively withdraw more than 219 billion gallons of water each day, resulting in the death of billions of aquatic organisms such as fish, larvae and eggs, crustaceans, shellfish, sea turtles, marine mammals, and other aquatic life. Most impacts are to early life stages of fish and shellfish through impingement' and entrainment 2 . The proposed rule would establish a baseline level of protection from impingement and then allow additional safeguards for aquatic life to be developed through site-specific analysis by the states. This flexible approach would ensure that the most up-to-date technologies are considered and appropriate cost-effective protections of fish and other aquatic populations are used.

Your letter expresses concerns regarding the potential costs that our rule may have on power plants and on consumers. Let me assure you that the EPA takes these concerns very seriously. The agency is working hard to develop a final rule that achieves environmental benefits

Impingement is the pinning of fish and other larger aquatic organisms against the screens or other parts of the

intake structure.

2 Entrainment is the injury or death of smaller organisms that pass through the power plant cooling system.

Internet Address (URL) http I/www epa gov Recyced/RecycIable Printed with Vegetable Oil Based Inks on 100% Postconsumer, Process Chlorine Free Recycled Prpeiconsistent with the Clean Water Act and in a way that ensures that our nation's energy supplies

remain reliable and affordable.

Your letter expressed concern about the impingement mortality standards, related alternatives and flexibility, and the timeline for compliance in the proposed rule. Since proposal, the EPA has received new data related to the performance of impingement mortality control technologies. In particular, the EPA obtained more than 80 studies that provided additional data on the costs and performance of these technologies. These data include important information related to how the EPA might approach the definition of impingement mortality and compliance alternatives.

On June 11, 2012, the EPA published a Notice of Data Availability (NODA) setting forth a number of possible approaches to increase flexibility for impingement requirements. Perhaps most significantly, the NODA described a streamlined regulatory process for facilities that simply opt to employ specific pre-approved technologies that have been consistently demonstrated to protect the greatest numbers of fish and other aquatic life. The NODA solicited comment on how to establish impingement controls on a site-specific basis in those circumstances in which the facility demonstrates that the typical controls are not feasible. The NODA also identified a possible site-specific impingement category that would reduce or even eliminate new technology requirements for facilities with very low rates of fish and aquatic life death or injury. The EPA also requested comment on how best to define closed-cycle recirculating systems to ensure effective operation of these systems at existing facilities. We were pleased that stakeholders submitted the information requested in the NODA, and the EPA is considering all of this new information as we move toward completing the final rule.

Your letter also indicated concern with an EPA survey that is described in a second NODA published June 12, 2012. As stated in the NODA, the EPA's work in this area is preliminary and, "the agency has not yet determined what role, if any, the survey will play in the benefits analysis of the final 3 16(b) rulemaking." This survey was conducted to provide the public with more complete information about the benefits of reducing fish mortality. The benefits to society of preventing ecological damage to the aquatic environment are difficult to assess because it is hard to place a monetary value on the ecological services and public benefits of a healthy ecosystem. At the time of proposal, the EPA made it clear that the Regulatory Impact Analysis (RIA) underestimated the actual benefits and that the agency had already commenced a stated preference survey in order to do a better job of capturing the benefits of the rule.

The stated preference method poses hypothetical policy options, allowing researchers to directly inquire about citizens' willingness to pay for environmental improvements. This method can assess ecological benefits in a more complete manner than the methodologies the EPA used for the proposed rule. Stated preference methodologies have been refined for over 30 years in the academic literature, have been extensively tested and validated through years of research, and are widely accepted by both government agencies and the U.S. courts as a reliable technique for estimating non-market values of healthy ecosystems . The EPA has been using data derived from stated preference surveys, where appropriate, in RIAs, for several decades. The EPA survey

3 See: Enhancing the Content Validity of Stated Preference Valuation: The Structure and Function of Ecological Indicators, Jolmston et al., 2012 and What Have We Learnedfrom Over 20 Years of Farmland Amenity Valuation Research in North America?, Bergstrom and Ready 2009.described in the second NODA follows the White House Office of Management and Budget

(0MB) published guidance on conducting such surveys (Circular A-4: Regulatory Analysis 2003), and was approved by 0MB in June 2011.

The NODA was intended to inform the public of the preliminary results of the survey, make this information available for review, and provide an opportunity for all interested stakeholders to comment. The EPA also explained that the survey would be revised based on additional analysis, a range of analytical tests for rigor and consistency, public comments, and the results of an external peer review which would be completed prior to taking final action on the rule. Since publication of the NODA, the EPA has completed the majority of this additional analytical work and reviewed the public comments from the June 12 NODA. We are also proceeding with an independent, external peer review, as described above, with a panel of economists and survey experts. Once the EPA has revised its analysis to reflect peer reviewer comments, the results of the stated preference survey will be posted online at: http://epa.gov/waterscience/3 1 6b. After a full review of the completed analysis, public comments, and the independent peer review, the agency will be in a position to determine the appropriate use of the stated preference survey in the final 3 16(b) rulemaking.

Again, thank you for your letter on this important rule. The agency proposed these regulations to meet its Clean Water Act obligations, and we expect to take final action in 2013. In doing so, we intend to fully consider all comments we received during the public comment periods for the proposed rule and the subsequent comments received in response to the two NODAs published in the Federal Register on June 11 and 12, 2012. For additional information on the proposed rule or the NODAs, please go to the EPA's 316(b) webpage at the above link.

If you have further questions, please contact me or your staff may call Greg Spraul in the EPA's Office of Congressional and Intergovernmental Relations at (202) 564-0255.

Nancy K. Stoner Acting Assistant Administrator