August 8, 2012 316(b) SP Survey – Pacific Survey Region A1E Reductions and Fish Saved| pg 1

Date August 8, 2012

To The Section 316(b) Existing Facilities Rule Record

From Erik Helm, U.S. Environmental Protection Agency

Subject 316(b) Stated Preference (SP) Survey – Calculation of Age-one Equivalent (A1E)

Reductions and Percent of Fish Saved for the Pacific Survey Region

The primary purpose of this memorandum is to provide clarification of EPA’s calculation of the percent

of fish saved under different regulatory options for the Pacific Stated Preference (SP) survey region. This

memorandum expands upon preliminary data and analysis for the Pacific SP survey region presented in

the, June 2012 EPA document entitled, “Survey Support Document, In Support of Section 316(b) Stated

Preference Survey Notice of Data Availability” (DCN 11-4524) and the June 5, 2012 EPA memorandum

to the 316(b) rulemaking record with the subject line, “316(b) Stated Preference (SP) Survey – Survey

Methods and Model Results” (DCN 11-4525).

On September 27, 2010, after the initial development of the SP survey questionnaires, the State of

California announced a policy requiring impingement and entrainment (I&E) technology at coastal

electric power plants. This policy announcement drew into question the baseline I&E losses values to be

used in the Pacific region survey questionnaires. Arguments existed for both the inclusion and exclusion

of the California coastal power plant losses in the baseline value to be presented to surveyed individuals.

EPA made a decision to maintain the Pacific survey questionnaire as tested in focus groups and include

the California coastal power plant losses in the baseline I&E mortality values. This decision has a direct

impact on how the percent of fish saved is calculated for the assessment of benefits. The percent of fish

saved, for potential regulatory options, is calculated by dividing the estimated reduction in A1E losses in

the Pacific region by an estimate of baseline A1E losses in the Pacific region that includes California

coastal power plants. Alternative calculations of percent of fish saved that do not include the A1E

baseline losses at California coastal power plants would affectively inflate respondents’ willingness-topay (WTP) per fish and lead to overestimates of value for regulatory options analyzed in the Pacific

region.

This memorandum includes the following sections:

 Section 1 is a description of the Pacific SP survey benefits assessment region presented in NODA

documents, which are different from the “California” benefits region used in the proposed rule

supporting documents.

 Section 2 discusses the 316(b) SP survey development and the announcement of the California

cooling water intake policy.

 Section 3 outlines the options for calculating baseline A1E reductions given the “California

Policy.”

 Section 4 describes the calculation of the percent of fish saved for the Pacific SP survey region

under the regulatory options presented in the proposed rule supporting documents.

1 The Pacific SP Survey Region
August 8, 2012 316(b) SP Survey – Pacific Survey Region A1E Reductions and Fish Saved| pg 2

As noted in the supporting documents to the NODA, the SP survey regions differ from the seven benefits

regions used in the Environmental and Economic Benefits Assessment (EEBA) proposed rule support

document (USEPA 2011).1 This redefinition of the benefits regions was precipitated by the survey

sampling plan that uses state boundaries to stratify geographically U.S. households into four regions. The

Pacific survey region, presented in the NODA documents, includes the states of California, Washington,

Oregon, and Hawaii in their entirety. This Pacific survey region encompasses the coastal facilities that

made up the “California” benefits region from the proposed rule analysis, which includes four facilities in

Hawaii. Additionally, the Pacific survey region includes those non-coastal 316(b) facilities in California,

Washington, and Oregon that would have previously been considered part of the Inland benefits region

for the proposed rule analysis.

2 SP Survey Development and the Announcement of the California State

Policy

EPA pre-tested the survey instrument extensively in six focus groups and a set of eight one-on-one

cognitive interviews conducted from July 21, 2010 to September 23, 2010 (EPA ICR # 2090-0028). The

current survey instrument pre-tested in the 2010 round of focus groups and cognitive interviews was built

upon an earlier version initially developed as part of the 316(b) Phase III rulemaking. Twelve focus

groups were conducted between 2004 and 2005 for the Phase III survey, the details of which are

discussed in EPA ICR #2155.01. The Phase III survey was also peer reviewed in January 2006. EPA

modified the survey several times based on the results of the pre-tests, to minimize potential biases, and to

ensure shared and accurate interpretation of survey language among the respondents. The current survey

incorporates both the results from all prior focus groups and cognitive interviews, and the

recommendations received from the 2006 peer review panel.

During the survey development process EPA estimated the baseline amount of impingement and

entrainment (I&E) mortality for the Pacific region at approximately 384 million A1E.

The California Office of Administrative Law approved the “Policy on the Use of Coastal and Estuarine

Waters for Power Plant Cooling” on September 27, 2010 requiring that all coastal power plants reduce

their intake flow to a level commensurate with closed-cycle cooling (other coastal manufacturing

facilities in California are not included in the state policy). The California policy, being implemented

before the final 316(b) rule, would affect the overall size of I&E reductions attributable to the national

regulation. Because California is part of the Pacific SP survey region, this policy announcement raised

the issue of what baseline I&E mortality A1E numbers should be presented to survey respondents in that

region. Section three, below, outlines the two options for baseline A1E that could have been presented in

the Pacific survey region questionnaires.

3 The Options for Calculating Baseline A1E in the Pacific SP Region

Given the announcement of the California coastal power plant policy, EPA was faced with a decision as

to which of two baseline options should be presented in the Pacific regions survey questionnaire. Option

1 The seven benefits regions from the EEBA are California, Great Lakes, Inland, Mid-Atlantic, Gulf of Mexico, North Atlantic,

and South Atlantic.
August 8, 2012 316(b) SP Survey – Pacific Survey Region A1E Reductions and Fish Saved| pg 3

1 was to leave the California coastal power plants in the baseline presented to potential respondents.

Option 2 was to remove the California coastal power plants. Under Option 1, leaving the coastal plants in

the baseline would minimize potential respondent confusion when presented with maps in the survey

questionnaires that had no California coastal facilities. Maintaining the pre “California Policy” tested

baseline would also mean that the Pacific region survey instrument would not have to be redesigned to

give additional information about California versus Federal regulation of cooling water. This redesign

work would have added additional cognitive complications to the Pacific survey and raised issues of

valuing state versus federal regulation. Economic theory indicates that adding attributes to the choice

questions to control for the state versus federal issue would not change the value of the other

environmental attributes in the survey. However, EPA had found in early focus groups that people

became confused when assessing programs that were implemented on both a regional and national scale

in the same survey. The differing scope of state versus federal programs in a survey would likely produce

the same cognitive problems in Pacific survey respondents. The larger baseline value that included the

California coastal power plants would also mean that EPA’s WTP estimates for large reductions in A1E

losses would be more robust. This would be most useful if EPA needed to develop benefits estimates for

potential regulatory options that required stricter standards then the California policy.

The advantages of Option 2 include more closely mirroring the potential reductions in I&E for regulatory

options that are not as strict as the California policy on coastal power plants. Greater insight into the

public’s value with regard to federal versus state regulation of cooling water intakes might have been

obtained had the survey been redesigned.

Given the advantages and disadvantages of the two options for presenting the baseline in the Pacific

survey booklets, the Agency determined that the baseline should still include California coastal electric

generating facilities. The primary factor driving this decision is the Agency’s concerns about the

cognitive burden to respondents. Individuals taking the survey in the Pacific region were already faced

with a lengthy survey booklet and complicated choices.

4 Calculation of Percent of Fish Saved in the Pacific SP Region

EPA’s decision to maintain the baseline that included the California coastal power plants has

ramifications when determining how to calculate the percent fish saved in the Pacific region for potential

regulatory options. EPA calculates percent fish saved by dividing the estimated reduction in A1E losses

under a regulatory option by an estimate of baseline A1E losses. EPA has updated its estimate of the

Pacific survey region’s total baseline A1E losses that now stands at 385.99 million. This total estimate of

baseline loses for the Pacific region is made up of; 36.83 million A1E, representing losses at coastal

Washington and Hawaii facilities as well as coastal manufacturing in California; 1.95 million A1E at

inland California, Oregon, and Washington facilities: and 347.20 million A1E, representing coastal

Californian electric power plants covered by the state policy. The 385.99 million A1E number is the

correct value to use as the denominator in the calculation of the percent change in the fish saved attribute

for the Pacific region because it includes the I&E at coastal California facilities and is consistent with

how the baseline was presented in the survey questionnaires.

For the stated preference survey NODA, reductions in the A1E losses under regulatory options in the

Pacific survey region was based on only those facilities considered in scope for the proposed rule

analysis. They exclude coastal generators in California that are subject to California’s policy, which EPA

deemed to be at least as stringent as the options presented in the EEBA. EPA calculated the I&E
August 8, 2012 316(b) SP Survey – Pacific Survey Region A1E Reductions and Fish Saved| pg 4

reductions based on the proposed rule regulatory options analysis for the Pacific survey region that

includes state wide values for California (excluding coastal power plants), Oregon, Washington, and

Hawaii, and divided those values by the total baseline A1E losses for the Pacific region when calculating

its preliminary estimates of percent fish saved.2 The resulting percent fish saved under this approach

ranges from about 0.5% under Option 4 to 9.0% under Option 3 for the Pacific region. Refer to Exhibit

II-11 of the Survey Support Document for the full results. These percent reduction figures are the correct

values to be used for option assessment in the Pacific region. Survey respondents expressed their values

for a reduction in both the percent of fish saved and the absolute number of fish saved, both numbers

being presented as equivalent in the choice questions of the survey booklets. Excluding the California

coastal power plants from the calculation of baseline losses the percent reductions for the Pacific region

would range from 4.46 to 89.59 percent across the proposal options. If these higher percent reduction

values were used in the calculation of benefits, this would be equivalent to inflating the per fish value

expressed by respondents in the region. This inflation of per fish willingness to pay would result in an

overestimate of the benefits of regulatory options in the Pacific SP region. Therefore, the appropriate

percent reduction numbers are those including the California coastal plants in the calculation of baseline

I&E for the region.

2 References

U.S. Environmental Protection Agency (USEPA). 2011. Environmental and Economic Benefits Analysis

for the Proposed Section 316(b) Existing Facilities Rule. Office of Science and Technology,

Engineering and Analysis Division. EPA 821-R-11-002. March 28.

U.S. Environmental Protection Agency (USEPA). 2012. Survey Support Document, In Support of Section

316(b) Stated Preference Survey Notice of Data Availability. Office of Science and Technology,

Engineering and Analysis Division. DCN 11-4524, June.

2 The total baseline losses of 385.99 million A1E for the Pacific region presented in Exhibit II-11 of the Survey Support

Document includes all coastal and inland facilities in the states of California, Washington, and Oregon, as well as, facilities

in Hawaii.