### MEMORANDUM

**Tetra Tech, Inc. 10306 Eaton Place, Suite 340**  **Fairfax, VA 22030 phone**  **703**
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**- 6000**  **fax 703** 
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**- 6007**  TO : Paul Shriner and L isa Biddle, EPA FROM : Kelly

Meadows DATE: May 6 , 2014 SUBJECT: Applicability of the Existing Facility

Rule to Offshore Facilities The purpose of this memo is to document existing information on the applicability of the final existing facility

rule on facilities that operate offshore

. Examples cited in the rulemaking preamble include offshore oil and gas extraction facilities, seafood processing vessels, and liquefied natural gas ( LNG ) terminals. **Summary** In general, offshore facilities are substantiall y different than those onshore. As a result, the technologies available to land

- based facilities (and studied by EPA for the rulemaking) are generall y not available for use at the offshore facilities on a widespread basis . Instead, permitting authorities are directed to develop 316(b) pe rmit conditions for these facilities on a best professional judgment (BPJ) basis. EPA reached this conclusion in the Phase III rule and has not encountered an y information that would lead it to revise this conclusion. **Background Information**  In developing the Phase I rule, EPA became aware of the possibility that the proposed 316(b) regulations for new facilities could apply to offshore industrial facilities, such as offshore oil and gas extraction facilities. 1 However, in the final Phase I ru le, EPA determined that it would require additional research and anal ys is to address these offshore industries and postponed taking any action. “EPA will propose and take final action on regulations for new offshore and coastal oil and gas facilities, as defined at 40 CFR 435.10 and 40 CFR 435.40, in

1 See 66 FR 28856, May 25, 2001.the Phase III section 316(b) rule. EPA is deferring regulation of these facilities

due to the unique engineering, cost, and economic issues associated with offshore and coastal drilling rigs, ships, and platforms.” 66 FR 65311, December 18, 2001. In the Phase III rule, 2 EPA established requirements for new offshore oil and gas extraction facilities. 3 EPA did not promulgate an y national requirements for new seafood processing vessels or LNG terminals. **Existing Offshore Industrial Facilities** However, none of the prior rulemaking phases addressed requirements for existing offshore oil and gas extraction facilities, as well as for other existing offshore industry sectors . The existing facility rule completes EPA’s assessment of offshore facilities by establishing that offshore industrial facilities are subject to 316(b) requirements on a site

- specific , BP J basis. EPA has received little new information regarding offshore industrial facilities since the Phase III rule. As a result, EPA continues to rel y upon its findings in the Phase III rule regarding the applicability

of 316(b) requirements to offshor e industrial facilities. Specifically (as discussed more below) , EPA found that while some ty pes of intake technologies may be viable at certain existing offshore facilities, there is substantial variability in the performance, technical feasibility , and c ost to install these technologies. As a result, EPA has again concluded that no national requirements are appropriate . Additionally , EPA found that some existing offshore facilities may

be operating in far offshore locations, beyond the areas defined as “w aters of the U.S.” Attachment A to this memo summarizes EPA’s prior anal ys is of offshore industrial facilities as a way to re

- examine the potential applicability to existing facilities.

2 See 71 FR 35006, June 16, 2006. 3 See § 125.130.**Attachment A: Prior Analyses of Offshore Industrial Facilities**

The text below consists of excerpts from previous EPA documents related to offshore industrial facilities. It is intended to provide existing information that influenced EPA’s decision to not promulgate an y national requirements for existing offshore industrial facilities ; the text has not been tailored for the final rule

. For a complete description of EPA’s prior analy sis of offshore industria l facilities, refer to the Technical Development Document for the Final Section 316(b) Phase III Rule (EPA

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- 1542 ) in the Phase III docket. 1. From the Technical Development Document for the Final Section 316(b) Phase III Rule (EPA

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- 003) , Chapter 1: Existing Offshore Oil and Gas Extraction Facilities Because the lowest co

- proposed flow threshold option was 50 MGD, the proposed requirements would not apply

to existing offshore oil and gas extraction facilities, as there are no existing offshore oil and gas extraction facilities with a design intake flow greater than 50 MGD. EPA did not propose to regulate existing offshore oil and gas extraction facilities, and decided not to establish national categorical requirements for them in the final Phase III rule. Instead, permit writers must impose impingement and/ or entrainment controls under Section 316(b) at existing offshore oil and gas extraction facilities on a case

- by

- case basis using their best professional judgment. Liquefied Natural Gas Import Terminals Based on information in EPA’s rulemaking record, EPA identified only a few existing and new liquefied natural gas (LNG) import terminals that withdraw water for cooling purposes. C urrently , onl y one existing offshore LNG import terminal meets the scope of the proposed Phase III rulemaking for existing facilities (e.g., existing facilities with design intake flows greater than 50 MGD, 25% or more of the water intake used for cooling purposes). As there is only one existing offshore LNG import terminal potentially within scope of the Phase III rulemaking, EPA determined that one facility did not justify

a national categorical rulemaking. Consequently , EPA decided not to establish natio nal categorical requirements for existing offshore LNG import terminals in the final Phase III rule. Based on information in EPA’s rulemaking record, EPA identified 11 new offshore LNG import terminals may be built over the next decade. However, EPA estimates only three or four of these new offshore LNG import terminals will meet the scope of the proposed Phase III rulemaking for new facilities (e.g., new facilities with design intake flows greater than 2 MGD, 25% or more of the water intake used for coolin g purposes). As there are onl y three or four new offshore LNG import terminal potentially within scope of the Phase III rulemaking, EPA determined that this limited number of facilities did not justify

a national categorical rulemaking. Consequently , EPA d ecided not to establish national categorical requirements for new offshore L NG import terminals in the final Phase III rule. Instead of national categorical impingement and entrainment control requirements for existing and new offshore LNG import terminals , permit writers must impose impingementand/or entrainment controls under Section 316(b) on cooling water intake structures at LNG

import terminals on a case

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- case basis using their best professional judgment. Seafood Processing Vessels Because the lo west proposed flow threshold option for a national categorical rule was 50 MGD, the proposed requirements would not have applied to existing seafood processing vessels, as there are no known existing seafood processing vessels with a design intake flow gre ater than 50 MGD. Seafood processing vessels, like most offshore oil and gas extraction facilities, are mobile facilities. However, offshore oil and gas extraction facilities may remain stationary

for several months to several y ears before relocating. Duri ng this time, aquatic habitats are formed in the vicinity of the facility . In contrast, seafood processing vessels do not remain stationary for any considerable period of time. Additional data available to the Agency indicate that given the relativel y low cooling water flows used b y seafood processing 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 velocit y, and their highl y mobile character (significantly more so than offshore oil and gas extraction facilities), these vessels are best assessed on case

- by

- case basis. Further, data available to the Agency

has not clearl y identified available technologies that would reduce entrainment for such vessels. EPA did not propose to regulate existing seafood processing vessels, and decided not to establish national categorical requirements for them in the final Phase III rule. For the same reasons as just mentioned, EPA also did not propose, and decided not to establish as part of today 's final action, national categorical requirements for new seafood processing vessels either. Instead, permit writers must impose impingement and/ or entrainment controls under Section 316(b) at seafood processing vessels on a case

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- case basis usin g their best professional judgment. 2. From the Technical Development Document for the Final Section 316(b) Phase III Rule (EPA

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- 003) , Chapter 2: II. OFFSHORE INDUSTRI ES EPA considered establishing national requirements for three additional industry groups that have been identified as potential large users of cooling water: offshore oil and gas extraction facilities, seafood processing vessels, and offshore LNG import terminals. An industry survey was developed in 2003 to collect data on offs hore oil and gas extraction facilities and seafood processing vessels. EPA also collected technical and economic information on existing and new offshore LNG import terminals. Under the final rule, onl y new offshore oil and gas extraction facilities are s ubject to 316(b) national categorical impingement and entrainment control standards. Existing offshore oil and gas extraction facilities are not subject to the national categorical requirements of the final rule. EPA’s record shows that existing offshore o il and gas extraction facilities have design intake flows less than 50 MGD, therefore none would meet the scope and applicability requirements considered for the final regulation. Based on information in EPA’s rulemaking record, EPA identified only

one exi sting and three or four new offshore LNG import terminals that meet the scope of the proposed Phase III rulemaking for new and existing facilities. As there are onl y fouror five offshore LNG import terminals potentially within scope of the Phase III rulem aking, EPA

determined that this limited number of facilities did not justify a national categorical rulemaking. Consequently , EPA decided not to establish 316(b) national categorical impingement and entrainment control standards for offshore LNG import ter minals. Instead of national categorical impingement and entrainment control requirements for existing and new offshore LNG import terminals, permit writers must impose impingement and/ or entrainment controls under Section 316(b) for cooling water intake s tructures at LNG import terminals on a case

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- case basis using their best professional judgment. 3. From the Technical Development Document for the Final Section 316(b) Phase III Rule (EPA

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- 003) , Chapter 2: EPA concluded no entrainment technologies were available for existing seafood processing vessels. 4. From the Technical Development Document for the Final Section 316(b) Phase III Rule (EPA

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- 003) , Chapter 7 : IN TRODUCTION Under the final Phase III rule, no existing oil and gas (O&G) extrac tion facilities are subject to national performance standards. NPDES permit writers will continue to develop impingement and entrainment control standards for these existing facilities using BPJ on a case

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- case basis under authorit y of Section 316(b) of the Clean Water Act. New offshore oil and gas extraction facilities are subject to the final rule, as described in the preamble. Since the Phase I 316(b) rulemaking, EPA collected technical, engineering, and economic information associated with this indus try sector. EPA also received information from industry trade associations to assist its analy ses. EPA used this information to assess costs, economic impact and unique technical issues associated with various technology

- based options available to control impingement and entrainment of aquatic organisms, including technology

- based options available for the sea chest ty pe of cooling water intake structures for new and existing offshore oil and gas extraction facilities. EPA used Phase Ipublic comments to ev aluate a number of BTA options specific to the offshore oil and gas extraction cooling water intake structures in the Phase III rulemaking. In the Phase III proposal EPA solicited public comments on its data, methodology , and proposed regulatory options fo r controlling impingement and entrainment of aquatic organisms from new and existing offshore oil and gas extraction facilities. After reviewing and incorporating public comments on the Phase III proposal, EPA is promulgating national impingement and entra inment standards for cooling water intake structures at new offshore oil and gas extraction facilities.5. From the Technical Development Document for the Final Section 316(b) Phase III Rule

(EPA

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- 003) , Chapter 7 : 5.0 FINAL TECHNOLOGY OPTIONS IDENTIFIED IN THE PHASE III RUL EMAKING EPA proposed to require impingement and entrainment control requirements for new offshore oil and gas extraction facilities in the Phase III 316(b) rulemaking. EPA finds the technology available as discussed earlier in this chapter and affordable (see the Economic Benefits Anal ys is (EBA)). As stated in the Phase III Notice of Data Availability , EPA anal yz ed additional data on the regions in which offshore oil and gas extraction facilities operate in order to better ch aracterize the potential for entrainment of ichthyoplankton (planktonic egg and larval life stages of fish) b y offshore oil and gas extraction facilities. EPA believes these data indicate the potential for entrainment and impingement from cooling water int ake structures at oil and gas facilities operating in offshore regions. While the data did show spatial and temporal variations, as well as variability

at different depths, the range of ichthy oplankton densities found were within the same range seen in coa stal and inland waterbodies addressed by the Phase I final rule. See 70 FR 71059 (November 25, 2005). Moreover, the importance of controlling impingement and entrainment at offshore oil and gas extraction facilities is highlighted by the fact that these structures may

provide important fish habitat. There are some site specific anal ys es on the potential environmental benefits of these “artificial reef” effects; however, EPA was not able to locate a comprehensive summary anal ys is on this topic for the final rulemaking record. Using site specific analy ses EPA was able to identify that a variet y of fish species are known to be attracted to and to aggregate around and directly under offshore oil and gas extraction facilities, often resulting in densities of fish of that are higher than the densities found in adjacent open waters. Both adult fish and young fish gather around these structures. Young fish may be more susceptible to impingement and entrainment than adult fish. For example, oil and gas platforms and artificial reefs may

serve as red snapper habitat. In general, five to 100 times more fish can be concentrated near offshore platforms than in the soft mud and clay habitats elsewhere in the Gulf of Mexico.20 As a result, 70 percent of all fishing trips in the Gulf of Mexico head for oil and natural gas platforms. L ikewise, 30 percent of the 15 million fish caught by recreational fishermen every

y ear off the coasts of Texas and Louisiana come from the waters around platforms. The offshore marine areas in whi ch oil and gas extraction facilities are located contain large numbers of fish and shellfish eggs and larvae that drift with ambient currents and have minimal swimming ability. These organisms are vulnerable to entrainment by oil and gas facilit y cooling w ater intake structures. Densities of these organisms are variable across offshore marine areas, but they

can be as great as the densities found in estuarine environments (see preamble section IV for further discussion). EPA will address potential impingement and entrainment impacts at existing facilities through NPDES permits on a case

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- case basis, using best professional judgment (see 40 CFR 125.90(c)). For example, EPA Region 4 has included requirements for existing oil and gas extraction facil ities to conduct a study to determine technologies or operating procedures to reduce the adverse environmental impact of these structures on aquatic life. EPA applied different regulatory requirements for new oil and gas extraction facilities depending on whether they

are projecting to use sea chests as their cooling water intake structure. New oiland gas extraction facilities without sea chests as cooling water intake structures are required to

meet impingement and entrainment requirements, while those w ith sea chests are onl y required to meet impingement requirements. EPA made this distinction based on the potential lack of technologies to control entrainment impacts at the 316(b) Phase I performance standard for cooling water intake structures using sea chests. Simple pipes, caissons and submersible pumps used for cooling water extraction can be fitted with premanufactured cylindrical wedgewire screens (<1.75 mm slot size) to prevent entrainment and impingement of marine life. Consequently , control techn ologies are available for these cooling water intake structures, and EPA is promulgating impingement and entrainment control requirements for new offshore oil and gas extraction facilities that do not use sea chests. 6. From the Technical Development Documen t for the Final Section 316(b) Phase III Rule (EPA

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- 003) , Chapter 8 : II. OFFSHORE OIL AND GAS EXTRACTION FACILITIES AND SEAFOOD PROCESSI NG VESSEL S IN TRODUCTION To identify

suitable technologies to minimize impingement mortalit y and entrainment of fish in ty pical seawater intake structures, the Agency evaluated currentl y used technologies as well as other newl y developed technologies. Technologies known to be used at existing seawater intakes include standard screens, velocity caps and barrier ne ts. Other technologies identified as possible candidates include acoustic barriers, air curtains and electric barriers. Data on technologies such as acoustic or electric barriers were collected and evaluated as they have the potential to limit impingement on what are otherwise difficult to modify s ys tems, such as sea chests. Chapter 7 provides a detailed discussion on the impingement and entrainment control technologies for oil and gas extraction facilities that EPA used for estimating incremental complianc e costs of the final 316(b) Phase III final rule. This chapter also provides information on biofouling control for these offshore facilities. An alternative technology must prove to be practical before progressing as a viable and technicall y feasible cand idate technology . The primary criterion for a practical/acceptable alternative configuration/technology is that it is successfull y implemented at one or more facilities, including but not limited to other manufacturing industries with a similar seawater intake structure located any where around the world. In addition to identifying appropriate 316(b) control technologies, the following section characterizes t ypical seawater intake structures used by offshore oil and gas extraction facilities and/or seafood processing vessels. 1.0 AVAILABLE TECHNOLOGIES 1.1 Known TechnologiesThere are three main technologies applicable to the control of impingement and entrainment of

aquatic organisms for cooling water intakes at offshore industry sectors evaluated for th is rulemaking: passive intake screens, velocit y caps, and modification of an intake location. Each technology

is discussed below with respect to its potential use with intakes at offshore oil and gas extraction facilities and seafood processing vessels. [...] The use of a passive intake screen on a sea chest for an existing facilit y (as used by some MODUs and man y seafood processing vessels) may be limited. This is because the size of the opening of a sea chest into the ocean is essentially fixed. To incre ase the size of a sea chest would be very

costly due to significant works at a dry dock. A passive screen that has a suitabl y low face velocit y ma y therefore have to protrude outside the hull of the vessel. This would have a negative impact on the hydrod yn amics of the vessel and create a catch point under the waterline. Alternativel y, the passive screen may be used in conjunction with another technology such as an acoustic or electro barrier to reduce impingement, but EPA has no data demonstrating the effec tiveness of such a combination of technologies for non

- fixed facilities. The use of a passive intake screen on a sea chest for a new facility may be possible depending on the ship design requirements and biofouling controls. Due to the success of passive i ntake screens at many installations around the world, this ty pe of technology

is a suitable fish barrier for retrofit applications on offshore oil and gas extraction facilities and seafood processing vessels that do not employ sea chests. [...] [ T ] here is somewhat limited data on [the performance of velocity caps] when used alone. In the case of offshore oil and gas extraction facilities, velocity caps may be used in conjunction with a passive intake screen. However, the biofouling drawback of a passive int ake screen may also be present and existing biofouling control technologies should control these operational concerns. Other possible barriers to use in conjunction with a velocit y cap may include the “other” technologies noted below. Facilities using sea chests may have limited opportunities to control entrainment as required by the Phase I rule. EPA recognizes that MODUs using sea chests may require vessel specific designs to compl y with the final 316(b) Phase III rule. EPA identified that some impingeme nt controls for MODUs with sea chests may entail installation of equipment projecting bey ond the hull of the vessel (e.g., horizontal flow diverters). Such controls may not be practical or feasible for some MODUs since the configuration may alter fluid dy

n amics and impede safe seaworthy travel, even for new facilities that could avoid the challenges of retrofitting control technologies. [...] EPA believes that the cost of modifying existing structures with deeper intakes will be significantl y greater than the equipment costs associated with screens and velocity caps. In addition, the need for an environmental assessment to identify a lower impact zone for modified intakes would result in additional cost and time constraints. Therefore, EPA did not includemo dification of an intake location as part of their proposed technology options in the final rule. Additionally , this ty

pe of technology

is not suitable for MODUs since they would operate in various locations, depths and environments. [...] III. CONCLUSION As suggested b y the technology studies evaluated in this chapter, the technologies presented can substantially

reduce impingement mortality and entrainment. With proper design, installation, and operation and maintenance, a facility can realize marked redu ctions. However, EPA recognizes that there is a high degree of variabilit y in the performance of each technology, which is in part due to the site

- specific environmental conditions at a given facility. EPA also recognizes that much of the data cited in thi s document was collected under a variet y of performance standards and study protocols that have arisen over the ye ars since EPA promulgated its last guidance in 1977. EPA expects that this information on technologies may be useful in developing case

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- ca se, best professional judgment permit conditions implementing CWA section 316(b). While EPA acknowledges that site

- specific factors may affect the efficacy

of impingement and entrainment reduction technologies, EPA believes that there are a reasonable numb er of options from which most facilities may

choose. EPA also believes that, in cases where one technology cannot meet the performance standards alone, a combination of additional intake technologies, operational measures, and/or restoration measures can b e employ ed.