28210 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Parts 433, 438 and 464

[FRL–5186–6]

RIN 2040–AB79

Effluent Limitations Guidelines,

Pretreatment Standards, and New

Source Performance Standards: Metal

Products and Machinery

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Proposed rule.

SUMMARY: This proposed regulation

establishes technology-based limits for

the discharge of pollutants into waters

of the United States and into publicly

owned treatment works by existing and

new facilities that manufacture,

maintain or rebuild finished metal parts,

products or machines.

This proposed regulation will reduce

the discharge of toxic pollutants from

Metal Products and Machinery (MP&M)

facilities by almost a million pounds per

year, thereby reducing violations of

water quality standards (which were

established to protect aquatic life and/

or human health) in water bodies across

the country. This proposed regulation

will also reduce the metals content of

municipal sludge, thereby allowing

approximately 184 additional POTWs to

land apply another 439,000 dry metric

tons of sewage sludge rather than

incinerating or landfilling the sludge.

As a result of consultations with

numerous stakeholders, the preamble

solicits comments and data not only on

issues raised by EPA, but also on those

raised by environmental groups, by state

and local governments who will be

implementing these regulations, and by

industry representatives who will be

affected by them. As indicated

elsewhere throughout this proposal, the

Agency welcomes comment on all

options, issues, and proposed decisions

and encourages commentors to submit

additional data during the comment

period (See Section XIX of this

preamble). The Agency plans to have

additional discussions with interested

parties during the comment period to

help ensure that the Agency has the

views of such parties and the best

possible data upon which to base

decisions for the final rule. EPA’s final

rule may be based upon any

technologies, rationale or approaches

that are a logical outgrowth of this

proposal, including any options

discussed in this or subsequent

documents.

DATES: Comments on the proposal must

be received by August 28, 1995. In

addition, EPA will conduct a workshop

covering this rulemaking, in

conjunction with a public hearing on

the pretreatment standards portion of

the rule. The public hearing and the

workshop will be held on June 28, 1995.

Persons wishing to present formal

comments at the public hearing should

have a written copy for submittal.

ADDRESSES: Submit comments in

writing, and if possible on a 3.5 inch

disk in Word Perfect 5.1 format to: Mr.

Steven Geil, Engineering & Analysis

Division (4303), U.S. EPA, 401 M Street,

SW., Washington, DC 20460.

The public hearing and the workshop

will be held starting at 9 a.m. at the Hall

of States, room 333, 444 North Capital

Street, Washington, DC 20001.

The public record for this rulemaking

is available for review at the EPA’s

Water Docket; 401 M Street, SW.,

Washington, DC 20460; call between 9

a.m. and 3:30 p.m. Eastern Standard

Time for an appointment. The EPA

public information regulation (40 CFR

part 2) provides that a reasonable fee

may be charged for copying. For access

to Docket materials, call (202) 260–3027.

FOR FURTHER INFORMATION CONTACT: For

additional technical information,

contact Mr. Steven Geil at (202) 260–

9817. Additional economic information

may be obtained by contacting Dr.

Lynne G. Tudor at (202) 260–5834.

Background documents supporting the

proposed regulations are described in

the ‘‘Background Documents’’ section

below. Some of the documents are

available from the Office of Water

Resource Center, Mail Code RC–4100,

US EPA, 401 M Street SW., Washington,

DC 20460; telephone (202) 260–7786 for

the voice mail publication request line.

SUPPLEMENTARY INFORMATION:

Overview

This preamble describes the scope,

purpose, legal authority and background

of this rule, the technical and economic

bases, and the methodology used by the

Agency to develop these effluent

limitations guidelines and standards.

Abbreviations, acronyms, and other

terms used in the Supplementary

Information Section are defined in

Appendix A to this notice.

Background Documents

The regulation proposed today is

supported by the major documents

listed below. (1) EPA’s technical

conclusions concerning the regulations

are detailed in the ‘‘Development

Document for Proposed Effluent

Limitations Guidelines and Standards

for the Metal Products and Machinery

Phase I Point Source Category,’’

hereafter referred to as the Technical

Development Document (EPA 821–R–

95–021). (2) The Agency’s economic and

regulatory flexibility analyses are found

in the ‘‘Economic Impact of Proposed

Effluent Limitations Guidelines and

Standards For The Metal Products And

Machinery Industry Phase I,’’ hereafter

referred to as the Economic Impact

Analysis (EPA 821–5–95–022). (3) The

industry profile is described in the

‘‘Industry Profile Of The Metal Products

And Machinery Industry Phase I,’’ (EPA

821–R–95–024). (4) The regulatory

impact analysis (including the Agency’s

assessment of environmental benefits) is

detailed in the ‘‘Regulatory Impact

Assessment of Proposed Effluent

Limitations Guidelines and Standards

for the Metal Products and Machinery

Industry Phase I,’’ hereafter referred to

as the Regulatory Impact Assessment

(EPA 821–R–95–023). (5) An analysis of

the incremental costs and pollutant

removals is presented in ‘‘Cost

Effectiveness Analysis of Proposed

Effluent Limitations Guidelines and

Standards for the Metal Products and

Machinery Phase I Point Source

Category,’’ (EPA 821–R–95–025). (6) The

statistical support for today’s proposal is

found in reports on the information

screener survey (called the Mini Data

Collection Portfolio), the detailed

questionnaire (call the Data Collection

Portfolio), and the calculation of limits.

Outline: This preamble is organized

according to the following outline:

I. Legal Authority

II. Background

A. Statutory Requirements of Regulation

1. Best Practicable Control Technology

Currently Available (BPT)

2. Best Available Technology Economically

Achievable (BAT)

3. Best Conventional Pollutant Control

Technology (BCT)

4. New Source Performance Standards

(NSPS)

5. Pretreatment Standards for Existing

Sources (PSES)

6. Pretreatment Standards for New Sources

(PSNS)

7. Best Management Practices (BMP)

B. Litigation History

C. Pollution Prevention Act

D. Common Sense Initiative

E. Consultation (Executive Order 12875)

F. Prior Regulation for Metals Industries

G. Scope of Today’s Proposed Rule

III. Summary of Proposed Regulations

A. BPT

B. BCT

C. BAT

D. NSPS

E. PSES

F. PSNS
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28211

IV. Overview of the Industry

A. Industry Description

B. Estimation of Number of Metal Products

& Machinery Phase I Sites

C. Source Reduction Review Project

V. Data Gathering Efforts

A. Existing Databases

B. Survey Questionnaire

C. Waste water Sampling and Site Visits

D. EPA Bench Scale Treatability Studies

(Terpene Study)

VI. Industry Subcategorization

VII. Water Use and Waste water

Characteristics

A. Waste water Sources and Characteristics

B. Pollution Prevention, Recycle, Reuse and

Water Conservation Practices

VIII. Approach for Estimating Costs and

Pollution Reductions Achieved by Waste

water Control Technology

IX. Best Practicable Control Technology

Currently Available

A. Need for BPT Regulation

B. BPT Technology Options and Selection

C. Calculation of BPT Limitations

D. Applicability of BPT

E. BPT Pollutant Removals, Costs, and

Economic Impacts

X. Best Conventional Pollutant Control

Technology

A. July 9, 1986 BCT Methodology

B. BCT Options Identified

XI. Best Available Technology Economically

Achievable

A. Need for BAT Regulation

B. BAT Technology Options and Selection

C. Calculation of BAT Limitations

D. Applicability of BAT

E. BAT Pollutant Removals, Costs, and

Economic Impacts

XII. Pretreatment Standards for Existing

Sources

A. Need for Pretreatment Standards

B. PSES Technology Options and Selection

C. Calculation of PSES

D. Applicability of PSES Limitations

E. Removal Credits

F. Compliance Date

G. PSES Pollutant Removals, Costs and

Economic Impacts

XIII. New Source Performance Standards

(NSPS) and Pretreatment Standards for New

Sources (PSNS)

XIV. Economic Considerations

A. Introduction

B. Overview of the Facilities Subject to

Regulation

C. Overview of Options Considered for

Proposal and Selection of the Proposed

Options

D. Economic Impact Methodology

E. Estimated Facility Economic Impacts

F. Labor Requirements and Possible

Employment Benefits of Regulatory

Compliance

G. Community Impacts

H. Impacts on Firms Owning Metal Products

& Machinery Facilities

I. Foreign Trade Impacts

J. Impacts on NSPS and PSNS

K. Regulation Flexibility Analysis

L. Cost Effectiveness Analysis

XV. Executive Order 12866

A. Introduction

B. Benefits Associated with the Proposed

Effluent Guidelines

C. Costs to Society

D. Benefit-Cost Comparison

XVI. Water Quality and Other Environmental

Benefits of Proposed Rule for the Metal

Products and Machinery (MP&M) Industry

XVII. Non-Water Quality Environmental

Impacts

A. Air Pollution

B. Solid Waste

C. Energy Requirements

XVIII. Regulatory Implementation

A. Upset and Bypass Provisions

B. Variances and Modifications

1. Fundamentally Different Factors

Variances

2. Economic Variances

3. Water Quality Variances

4. Permit Modifications

C. Relationship to NPDES Permits and

Monitoring Requirements

D. Best Management Practice

XIX. Solicitation of Data and Comments

XX. Guidelines for Comment Submission of

Analytical Data

A. Types of Data Requested

B. Analytes Requested

C. Quality Assurance/Quality Control (QA/

QC) Requirements

XXI. Unfunded Mandates Reform Act

Appendix A Abbreviations, Acronyms, and

Other Terms Used in This Notice

I. Legal Authority

This regulation is being proposed

under the authorities of sections 301,

304, 306, 307, 308, and 501 of the Clean

Water Act, 33 U.S.C. Sections 1311,

1314, 1316, 1317, 1318, and 1361; and

under authority of the Pollution

Prevention Act of 1990 (PPA), 42 U.S.C.

13101 et seq., Pub. L. 101-508,

November 5, 1990.

II. Background

A. Statutory Requirements of Regulation

The objective of the Clean Water Act

(‘‘Act’’) is to ‘‘restore and maintain the

chemical, physical, and biological

integrity of the Nation’s waters,’’

(section 101(a)). To assist in achieving

this objective, EPA is to issue effluent

limitations guidelines, pretreatment

standards, and new source performance

standards for industrial dischargers.

These guidelines and standards are

summarized briefly below:

1. Best Practicable Control Technology

Currently Available (BPT) (Section

304(b)(1) of the Act)

BPT effluent limitations guidelines

are generally based on the average of the

best existing performance by plants of

various sizes, ages, and unit processes

within the category or subcategory for

control of pollutants.

In establishing BPT effluent

limitations guidelines, EPA considers

the total cost of achieving effluent

reductions in relation to the effluent

reduction benefits, the age of equipment

and facilities involved, the processes

employed, process changes required,

engineering aspects of the control

technologies, non-water quality

environmental impacts (including

energy requirements) and other factors

as the EPA Administrator deems

appropriate (section 304(b)(1)(B) of the

Act). The Agency considers the category

or subcategory-wide cost of applying the

technology in relation to the effluent

reduction benefits. Where existing

performance is uniformly inadequate,

BPT may be transferred from a different

subcategory or category.

2. Best Available Technology

Economically Achievable (BAT)

(Section 304(b)(2) of the Act)

In general, BAT effluent limitations

represent the best existing economically

achievable performance of plants in the

industrial subcategory or category. The

Act establishes BAT as the principal

national means of controlling the direct

discharge of toxic pollutants and

nonconventional pollutants to navigable

waters. The factors considered in

assessing BAT include the age of

equipment and facilities involved, the

process employed, potential process

changes, and non-water quality

environmental impacts (including

energy requirements) (section

304(b)(2)(B)). The Agency retains

considerable discretion in assigning the

weight to be accorded these factors. As

with BPT, where existing performance

is uniformly inadequate, BAT may be

transferred from a different subcategory

or category. BAT may include process

changes or internal controls, even when

these technologies are not common

industry practice.

3. Best Conventional Pollutant Control

Technology (BCT) (Section 304(b)(4) of

the Act)

The 1977 Amendments to the Act

established BCT for discharges of

conventional pollutants from existing

industrial point sources. Section

304(a)(4) designated the following as

conventional pollutants: Biochemical

oxygen demanding pollutants (BOD),

total suspended solids (TSS), fecal

coliform, pH, and any additional

pollutants defined by the Administrator

as conventional. The Administrator

designated oil and grease as an
28212 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

additional conventional pollutant on

July 30, 1979 (44 FR 44501).

BCT replaces BAT for the control of

conventional pollutants for certain

facilities. In addition to other factors

specified in section 304(b)(4)(B), the Act

requires that BCT limitations be

established in light of a two part ‘‘costreasonableness’’ test. EPA’s current

methodology for the general

development of BCT limitations was

issued in 1986 (51 FR 24974; July 9,

1986).

4. New Source Performance Standards

(NSPS) (Section 306 of the Act)

NSPS are based on the best available

demonstrated treatment technology.

New plants have the opportunity to

install the best and most efficient

production processes and waste water

treatment technologies. As a result,

NSPS should represent the most

stringent numerical values attainable

through the application of the best

available control technology for all

pollutants (i.e., conventional,

nonconventional, and toxic pollutants).

In establishing NSPS, EPA is directed to

take into consideration the cost of

achieving the effluent reduction and any

non-water quality environmental

impacts and energy requirements.

5. Pretreatment Standards for Existing

Sources (PSES) (Section 307(b) of the

Act)

PSES are designed to prevent the

discharge of pollutants that pass

through, interfere with, or are otherwise

incompatible with the operation of

publicly owned treatment works

(POTWs). The Act requires pretreatment

standards for pollutants that pass

through POTWs or interfere with

POTWs’ treatment processes or sludge

disposal methods. The Act requires

industry to achieve PSES within three

years of promulgation. Pretreatment

standards are technology-based and

analogous to the BAT effluent

limitations guidelines. For the purpose

of determining whether to promulgate

national category-wide pretreatment

standards, EPA generally determines

that there is pass-through of a pollutant

and thus a need for categorical

standards if the nation-wide average

percent removal of a pollutant removed

by well-operated POTWs achieving

secondary treatment is less than the

percent removed by the BAT model

treatment system.

The General Pretreatment

Regulations, which set forth the

framework for the implementation of

categorical pretreatment standards, are

found at 40 CFR Part 403. Those

regulations contain a definition of passthrough that addresses localized rather

than national instances of pass-through

and does not use the percent removal

comparison test described above. See 52

FR 1586 (January 14, 1987.)

6. Pretreatment Standards for New

Sources (PSNS) (Section 307(b) of the

Act)

Like PSES, PSNS are designed to

prevent the discharges of pollutants that

pass through, interfere with, or are

otherwise incompatible with the

operation of POTWs. PSNS are to be

issued at the same time as NSPS. New

indirect dischargers, like the new direct

dischargers, have the opportunity to

incorporate into their plants the best

available demonstrated technologies.

The Agency considers the same factors

in promulgating PSNS as it considers in

promulgating NSPS.

7. Best Management Practices (BMP)

The Agency is not proposing BMPs

for MP&M. However, we are soliciting

comment on whether BMPs could be

promulgated in lieu of numeric

limitations for low discharge volume

sites. EPA has defined BMPs broadly (40

CFR 122.2) and is considering whether

numeric limitations are infeasible for

such sites because of the administrative

burdens imposed on permitting

authorities to develop, implement, and

monitor necessary permits. BMP’s could

also cause pretreatment permitting to be

more efficient and less costly for both

control authorities and dischargers. The

use of BMP’s instead of flow monitoring

associated with mass-based limits could

result in greater efficiencies and cost

savings for both control authorities and

discharges. Properly implemented,

BMP’s could provide environmental

protection equivalent to mass-based

limits at a lower cost. Since some

Control Authorities pass their costs

along to industrial users in the form of

service fees, cost savings to Control

Authorities could be passed along to

industrial users. BMPs could include

any of the in-process pollution

prevention or flow reduction

technologies discussed in the MP&M

public record and pollution prevention

bibliography section of the Technical

Development Document.

B. Litigation History

Section 304(m) of the Act (33 U.S.C.

1314(m)), added by the Water Quality

Act of 1987, requires EPA to establish

schedules for (i) reviewing and revising

existing effluent limitations guidelines

and standards (‘‘effluent guidelines’’),

and (ii) promulgating new effluent

guidelines. On January 2, 1990, EPA

published an Effluent Guidelines Plan

(55 FR 80), in which schedules were

established for developing new and

revised effluent guidelines for several

industry categories. One of the

industries for which the Agency

established a schedule was the

Machinery Manufacturing and

Rebuilding Category (the name was

changed to Metal Products and

Machinery in 1992).

Natural Resources Defense Council,

Inc. (NRDC) and Public Citizen, Inc.

challenged the Effluent Guidelines Plan

in a suit filed in U.S. District Court for

the District of Columbia (NRDC et al v.

Reilly, Civ. No. 89–2980). The plaintiffs

charged that EPA’s plan did not meet

the requirements of section 304(m). A

Consent Decree in this litigation was

entered by the Court on January 31,

1992. The terms of the Consent Decree

are reflected in the Effluent Guidelines

Plan published on September 8, 1992

(57 FR 41000). This plan requires,

among other things, that EPA propose

effluent guidelines for the Metal

Products and Machinery (MP&M)

category by November, 1994 and take

final action on these effluent guidelines

by May, 1996. The most recent Effluent

Guidelines Plan was published on

August 26, 1994 (59 FR 44235). EPA

filed a motion with the court on

September 28, 1994, requesting an

extension of time until March 31, 1995,

for the EPA Administrator to sign the

proposed regulation and a subsequent

four month extension for signature of

the final regulation in September 1996.

C. Pollution Prevention Act

The Pollution Prevention Act of 1990

(PPA) (42 U.S.C. 13101 et seq., Pub. L.

101–508, November 5, 1990) makes

pollution prevention the national policy

of the United States. The PPA identifies

an environmental management

hierarchy in which pollution ‘‘should be

prevented or reduced whenever feasible;

pollution that cannot be prevented

should be recycled in an

environmentally safe manner, whenever

feasible; pollution that cannot be

prevented or recycled should be treated

in an environmentally safe manner

whenever feasible; and disposal or

release into the environment should be

employed only as a last resort * * *’’

(42 U.S.C. 13103). In short, preventing

pollution before it is created is

preferable to trying to manage, treat or

dispose of it after it is created.

According to the PPA, source reduction

reduces the generation and release of

hazardous substances, pollutants,

wastes, contaminants or residuals at the

source, usually within a process. The

term source reduction ‘‘* * * includes

equipment or technology modifications,
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28213

process or procedure modifications,

reformulation or redesign of products,

substitution of raw materials, and

improvements in housekeeping,

maintenance, training, or inventory

control. The term ‘source reduction’

does not include any practice which

alters the physical, chemical, or

biological characteristics or the volume

of a hazardous substance, pollutant, or

contaminant through a process or

activity which itself is not integral to or

necessary for the production of a

product or the providing of a service.’’

In effect, source reduction means

reducing the amount of a pollutant that

enters a waste stream or that is

otherwise released into the environment

prior to out-of-process recycling,

treatment, or disposal.

The PPA directs the Agency to, among

other things, ‘‘* * * review regulations

of the Agency prior and subsequent to

their proposal to determine their effect

on source reduction’’ (42 U.S.C. 13103).

This directive led the Agency to

implement a pilot project called the

Source Reduction Review Project that

would facilitate the integration of source

reduction in the Agency’s regulations,

including the technology based effluent

guidelines and standards.

(see Section IV. B. for a more complete

discussion of the Source Reduction

Review Project.) The MP&M Phase I

category effluent guideline was

included in the Source Reduction

Review Project.

D. Common Sense Initiative

On October 17, 1994, the

Administrator established the Common

Sense Initiative (CSI) Council in

accordance with Federal Advisory

Committee Act (U.S.C. App. 2, Section

9(c)) requirements. One of the goals of

the CSI is to develop recommendations

for optimal multi-media approaches to

address environmental problems

associated with six industrial sectors

including Metal Plating and Finishing,

Electronics and Computers, Auto

Assembly, and Iron and Steel

Manufacturing. The current Clean Water

Act MP&M rulemaking studies, which

were initiated in 1989, overlap to

varying degrees these six CSI pilot

industrial sectors.

The following are the six elements of

the CSI program, as stated in the

‘‘Advisory Committee Charter.’’

1. Regulation. Review existing regulations

for opportunities to get better environmental

results at less cost. Improve new rules

through increased coordination.

2. Pollution Prevention. Actively promote

pollution prevention as the standard business

practice and a central ethic of environmental

protection.

3. Recordkeeping and Reporting. Make it

easier to provide, use, and publicly

disseminate relevant pollution and

environmental information.

4. Compliance and Enforcement. Find

innovative ways to assist companies that seek

to comply and exceed legal requirements

while consistently enforcing the law for those

that do not achieve compliance.

5. Permitting. Improve permitting so that it

works more efficiently, encourages

innovation, and creates more opportunities

for public participation.

6. Environmental Technology. Give

Industry the incentives and flexibility to

develop innovative technologies that meet

and exceed environmental standards while

cutting costs.

In addition, it is the intent of the

Agency to work with the CSI’s sector

teams and further integrate their

consensus recommendations applicable

to the MP&M Phase I proposal as they

are developed. Even though the MP&M

Phase I data collection and analysis

efforts were completed before the CSI

program was announced, many aspects

of the CSI objectives are reflected in the

MP&M proposal. As part of the

development of this proposal, EPA took

advantage of several opportunities to

gain the involvement of various

stakeholders. For example, a public

meeting was held in March of 1994 to

present the technology options under

consideration by the Agency. We have

addressed industry trade associations,

the Association of Metropolitan

Sewerage Authorities, pretreatment

coordinators from the Regions, States,

and municipalities, and the Effluent

Guidelines Task Force, and we have met

with environmental interest group

representatives. We have used

comments and concerns raised at these

meetings to frame solicitations for data

and comment on aspects of this

regulation ranging from pollution

prevention to implementation issues.

The MP&M Phase I proposal was based

in part on pollution prevention for the

largest dischargers, and the technical

documents that support the proposal

provide guidance on pollution

prevention techniques applicable to this

industry for use by all facilities. This

proposal is performance-based and does

not stipulate the use of specific control

or treatment technologies. Industry

retains the flexibility to develop or

select innovative technologies that meet

or exceed the performance-based

standards proposed today. EPA

considered cost effectiveness as part of

the overall MP&M Phase I effluent

guideline development process. The

MP&M Phase II effluent guideline

development process will further

support the CSI.

E. Consultation (Executive Order 12875)

Executive Order 12875, ‘‘Enhancing

the Intergovernmental Partnership’’

requires Federal Agencies to consider

the impacts of unfunded mandates on

state, local, or tribal governments.

Agencies, such as the EPA, that can

impose unfunded mandates on state,

local, or tribal governments are required

by Executive Order 12875 to ensure that

the Federal government either allocates

the funds necessary for compliance or

involves the affected agencies in the

regulatory development process. The

proposed MP&M Phase I regulation

establishes effluent limitations

guidelines and pretreatment standards

that will directly impact the state and

local waste water permitting process.

The primary impact of the proposed

MP&M Phase I regulation on state and

local regulatory agencies will be that an

increased number of permits will have

to be issued. The cost associated with

writing additional permits for direct

dischargers based on national guidelines

may be partially offset by a decrease in

the expenses associated with writing

individual permits based on local

conditions or best professional

judgment (BPJ). In general, EPA believes

that the cost of individual permits for

direct dischargers may be reduced by

the MP&M Phase I rule, because fewer

resources are required to issue effluentguideline-based permits than to issue

BPJ-based permits.

The proposed MP&M Phase I effluent

guidelines will be implemented as part

of the National Pollutant Discharge

Elimination System (NPDES) and

pretreatment permitting processes. An

estimated 1,895 direct and 8,706

indirect discharging facilities will

require permits under the proposed

MP&M Phase I regulation. Although

existing effluent guidelines such as

metal finishing (40 CFR 433) and

electroplating (40 CFR 413) cover some

of these facilities (approximately 2,000),

EPA expects a substantial net increase

in the number of permits state and local

regulatory agencies are required to

write. The economic impact on industry

associated with the additional permits is

not expected to adversely affect

industries that dominate local

economies in a manner that would

significantly alter state or local

government revenues.

The administrative burden created by

the proposed MP&M Phase I effluent

guidelines may be partially offset by

anticipated savings in the costs

associated with writing individual

permits. Currently, many permits are

written based on BPJ criteria. The

development of such permits is often
28214 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

contentious and can require a

significant investment in resources. The

proposed MP&M Phase I guidelines are

expected to require fewer resources to

develop permits than those based on

BPJ, since MP&M Phase I includes

specific effluent guidelines and

pretreatment standards. EPA solicits

comments on the administrative burden

associated with permits based on BPJ,

permits based on effluent guidelines,

and the relationship between the two.

The MP&M Phase I regulatory

development process was closely

coordinated with the public, industry

groups, and other interested parties.

MP&M regulation development

summaries were presented at technical

symposia and two public outreach

meetings. In addition, comments

regarding several implementation issues

are included in today’s notice (See

Section XIX). Based on public

comments, concerns will be addressed

and, if applicable, incorporated into the

final MP&M regulation.

EPA plans to continue the data

collection and public outreach programs

for MP&M Phase I. Consultation with

other governmental activities will also

be initiated early in MP&M Phase II

regulation development to allow

continued, effective compliance with

E.O. 12875 requirements.

F. Prior Regulation for Metals Industries

EPA has established effluent

guidelines regulations for thirteen

industries which may perform

operations that are sometimes found in

MP&M Phase I facilities. These effluent

guidelines are:

• Electroplating (40 CFR Part 413);

• Iron & Steel Manufacturing (40 CFR

Part 420);

• Nonferrous Metals Manufacturing (40

CFR Part 421);

• Ferroalloy Manufacturing (40 CFR

Part 424);

• Metal Finishing (40 CFR Part 433);

• Battery Manufacturing (40 CFR Part

461);

• Metal Molding & Casting (40 CFR Part

464);

• Coil Coating (40 CFR Part 465);

• Porcelain Enameling (40 CFR Part

466);

• Aluminum Forming (40 CFR Part

467);

• Copper Forming (40 CFR Part 468);

• Electrical & Electronic Components

(40 CFR Part 469); and

• Nonferrous Metals Forming & Metal

Powders (40 CFR Part 471).

These existing effluent guidelines

generally apply to the production of

semi-finished products, while the

MP&M Phase I category applies to

finished metal parts, products, and

machines. EPA recognizes that unit

operations performed in industries

covered by the existing effluent

guidelines generate waste water similar

to unit operations performed at MP&M

Phase I sites. A discussion of how these

guidelines are integrated with the

regulations proposed today is continued

in the following section.

G. Scope of Today’s Proposed Rule

The MP&M Phase I category applies to

industrial sites engaged in the

manufacturing, maintaining or

rebuilding of finished metal parts,

products or machines. Today’s proposed

effluent guideline (MP&M Phase I)

applies to process waste water

discharges from sites performing

manufacturing, rebuilding or

maintenance on a metal part, product or

machine to be used in one of the

following industrial sectors:

• Aerospace;

• Aircraft;

• Electronic Equipment;

• Hardware;

• Mobile Industrial Equipment;

• Ordnance; and

• Stationary Industrial Equipment.

MP&M Phase II will be proposed and

promulgated approximately three years

after the MP&M Phase I schedule. EPA

currently intends to cover the following

eight industrial sectors in MP&M Phase

II:

• Bus and Truck;

• Household Equipment;

• Instruments;

• Motor Vehicle;

• Office Machine;

• Precious and Nonprecious Metals;

• Railroad; and

• Ships and Boats.

EPA has identified these fifteen

industrial sectors in the MP&M

category; these sectors manufacture,

maintain and rebuild products under

more than 200 different SIC codes. In

order to make the regulation more

manageable, EPA has divided it into the

two phases discussed above; lists of

typical products manufactured within

the two MP&M phases are included as

appendices to the proposed regulation.

Although EPA believes that it has

clearly defined what the fifteen sectors

are and how they have been divided

into two phases for the purposes of

regulation, EPA expects that some

products will clearly fit within certain

industry sectors while others will be

more difficult to define. Some examples

of how the proposed MP&M Phase I

regulation would apply are provided

below for clarification.

An example of a clear fit would be a

site which manufactures aircraft

engines. The site would be considered

to be within the aircraft industrial sector

of MP&M. Since aircraft is an MP&M

Phase I industry, the aircraft engine

manufacturer would be covered by

MP&M Phase I.

Another example of a clear fit would

be a site which manufactures school

buses. The site would be considered to

be within the bus and truck industrial

sector of MP&M. Since bus and truck is

an MP&M Phase II industry, the school

bus manufacturer would be covered by

MP&M Phase II.

An example of a site which produces

products which would fall under more

than one MP&M Phase I industry would

be a site which manufacturers farm

tractors and farm conveyors. The site

would be considered to be within the

mobile industrial equipment and the

stationary industrial equipment sectors.

Since both mobile industrial equipment

and stationary industrial equipment are

MP&M Phase I industries, the farm

tractor and farm conveyor manufacturer

would be covered by MP&M Phase I.

Although MP&M Phase I covers seven

industrial categories, the proposed rule

is not subcategorized by industrial

sector (See Section VI). Instead, all

seven MP&M Phase I industries are

grouped together under one MP&M

Phase I category.

An example of a site that produces

products within an MP&M Phase I

industry and an MP&M Phase II

industry would be a site which

manufactures hand tools and household

cooking equipment. The site would be

considered to be within the hardware

and household equipment sectors. Since

hardware is an MP&M Phase I industry

and household equipment is an MP&M

Phase II industry, the site has operations

in both MP&M phases. As discussed

further below, EPA proposes to apply

the MP&M Phase I rule to sites with

operations in both MP&M Phase I and

MP&M Phase II. As a result, all of the

site’s operations (including those

performed to manufacture the cooking

equipment) would be covered under

MP&M Phase I. The coverage of sites

that might be assigned to either Phase I

or II is discussed further below.

An example of a site which

manufactures products which could be

difficult to assign to a specific MP&M

industrial sector would be a car door

handle manufacturing site. If a car door

handle were considered a piece of

hardware, then the site would fit under

MP&M Phase I (hardware industrial

sector). If, on the other hand, the door

handle were considered a motor vehicle

part, then the site would fit under

MP&M Phase II (motor vehicle

industrial sector). In cases where
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28215

products could be viewed under

different industrial sectors, EPA

proposes that the industrial sector(s)

which most accurately matches the

market into which the product is sold be

assigned. In addition, if a metal part has

a specific use in one of the fifteen

MP&M industrial sectors, then the

sector in which it is intended to be used

is the industrial sector that should be

assigned to that site. In this example,

the car door handle has no other uses

than operating the door of a car, and this

site would be considered a motor

vehicle site (MP&M Phase II).

Another example of a site which

produces products which could be

difficult to assign to a specific MP&M

industrial sector would be a site which

manufactures pistons for use in internal

combustion engines, stationary

generators, automotive engines, aircraft

engines, truck engines, etc. Since the

pistons are used in a wide variety of

industrial applications and are not

produced for use in a specific MP&M

industry, the piston manufacture should

be considered to be making a fabricated

metal product and be covered under

MP&M Phase I (hardware).

EPA is soliciting comment from any

industrial site which has the potential to

be covered by MP&M but is uncertain as

to their appropriate industrial sector

and phase (MP&M Phase I or MP&M

Phase II) classification. These sites are

requested to supply information about

what operations they are performing,

what products they are manufacturing,

and to what industries they are selling

their products.

As discussed above, some MP&M sites

will have operations in both MP&M

Phase I and Phase II industries. EPA

proposes to apply the MP&M Phase I

regulation to combined waste water

discharges when a site is manufacturing,

rebuilding or maintaining finished

metal products in both Phase I and

Phase II sectors.

For example, a site manufacturing

aircraft components and discharging

process waste water in the process is

included in the aircraft sector and thus

its waste water discharges would be

regulated by MP&M Phase I effluent

guidelines. Another site which

manufactures components that are used

in aircraft and ships and generates waste

water in the process which is combined

and discharged would also be regulated

by the MP&M Phase I effluent

guidelines for the combined discharge.

This proposal should alleviate burdens

on the permit writers and allow the site

to achieve compliance more cost

effectively, since they will have to

comply with one set of limits.

EPA’s data collection and analysis of

MP&M sites included MP&M Phase I

and Phase II overlap sites and

processing of both Phase I and II parts

at these sites. Many of these sites use

the same equipment to manufacture,

maintain, and rebuild goods for both

Phase I and Phase II sectors, making it

impossible to separate the two phases,

and in many cases impossible to

distinguish among the sectors, for these

sites.

Typical MP&M unit operations

include any one or more of the

following: abrasive blasting, abrasive jet

machining, acid treatment, adhesive

bonding, alkaline treatment, anodizing,

assembly, barrel finishing, brazing,

burnishing, calibration, chemical

conversion coating, chemical

machining, corrosion preventive

coating, disassembly, electrical

discharge machining, electrochemical

machining, electrolytic cleaning,

electroplating, electron beam

machining, electropolishing, floor

cleaning, grinding, heat treating, hot-dip

coating, impact deformation,

laminating, laser beam machining,

machining, metal spraying, painting,

plating, plasma arc machining,

polishing, pressure deformation,

rinsing, salt bath descaling, soldering,

solvent degreasing, sputtering,

stripping, testing, thermal cutting,

thermal infusion, ultrasonic machining,

vacuum metalizing, welding and

numerous sub-operations within those

listed above. In addition to waste water

that is generated from these operations,

these operations also frequently have

associated rinses and water-discharging

air pollution control devices which are

also included under the scope of today’s

proposed regulation.

Waste water from noncontact,

nondestructive testing is also included

under the scope of today’s proposed

regulation. A common source of

‘‘testing’’ waste water is photographic

waste from nondestructive X-ray

examination of parts.

Many MP&M sites will also have

operations covered by one of the

existing metal processing effluent

guidelines listed above in Section II.D.

In general, with the exception of the

metal finishing regulations, the existing

effluent guideline will continue to apply

to those operations judged to be covered

by it. MP&M will provide the basis for

establishing permit limitations for the

unit operations which at present are not

covered, covered by the metal finishing

effluent guidelines regulation, or

covered by best professional judgment.

EPA is proposing to require that the

MP&M Phase I effluent guidelines

regulation replace the metal finishing

regulation for sites with operations in an

MP&M Phase I industrial sector. Both

MP&M and metal finishing apply to the

same types of unit operations. EPA has

included the metal finishing sites in its

data collection and study of the MP&M

industry and has estimated the costs

and impacts on these sites to comply

with the proposed MP&M regulation.

EPA anticipates that today’s proposed

limitations will impose more stringent

requirements on waste water discharges

from MP&M/metal finishing sites

without undue economic impacts (see

Section XIV), and therefore is proposing

that MP&M replace metal finishing

regulations for sites satisfying the

MP&M Phase I criteria. Today’s

proposal does not apply to surface

finishing job shops and independent

circuit board manufacturers as defined

in this regulation; they will continue to

be covered by 40 CFR Part 413 and 40

CFR Part 433.

‘‘Surface finishing job shops’’ defined

in the proposed MP&M regulation are

identical to ‘‘job shops’’ defined in the

metal finishing category (40 CFR 433).

Indirectly discharging job shops which

were considered existing for the metal

finishing category (existing prior to

August 31, 1982) and independent

printed circuit board manufacturers will

continue to be covered by the

electroplating category (40 CFR 413).

Indirectly discharging jobs shops which

were considered new sources for the

metal finishing category and directly

discharging job shops will continue to

be covered by the metal finishing

category.

III. Summary of Proposed Regulations

A. BPT

EPA is proposing to establish

concentration-based BPT limitations

which reflect the best practicable

technology performance. EPA proposes

to require permit writers to convert the

concentration-based limitations into

mass-based limitations based on MP&M

flow guidance in the MP&M Phase I

Technical Development Document. This

document provides guidance to permit

writers on identifying sites with

pollution prevention and water

conservation technologies equivalent to

those listed above (e.g., electrodialysis,

reverse osmosis). EPA recognizes that

there are many different pollution

prevention and water conservation

technologies that may achieve the same

performance as those listed above;

therefore, the Agency has provided

permit writers guidance on assessing

these technologies.

EPA recommends that, for sites with

pollution prevention and water
28216 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

conservation technologies in place that

are equivalent to those included as the

basis for BPT, permit writers use

historical flow as a basis for converting

the concentration-based limitations to

mass-based. For sites without these

types of technologies in place, EPA

recommends that permit writers do not

use historical flow, but use other tools

listed in the development document

(e.g., measuring production through unit

operations, measuring the concentration

of total dissolved solids (TDS) in rinse

waters) to convert the concentrationbased limitations to mass-based. This

approach encourages sites to implement

good water use practices and investigate

and install pollution prevention and

water conservation technologies. By

recommending use of historical flow

only when sites have pollution

prevention and water conservation

technologies in place, EPA expects that

permits based on BPT will reflect

pollution prevention and water

conservation technologies. If mass-based

limitations have not been developed as

required, the source shall achieve

discharges not exceeding the

concentration limitations listed in the

regulation.

The technology basis for BPT is endof-pipe treatment using chemical

precipitation and sedimentation

(commonly referred to as lime and settle

technology), used in conjunction with

flow reduction and pollution prevention

technologies. EPA has also included the

following as a basis for BPT limits: oilwater separation through chemical

emulsion breaking and either skimming

or coalescing; cyanide destruction

through alkaline chlorination; chemical

reduction of hexavalent chromium;

chemical reduction of chelated metals;

and contract hauling of organic solventbearing waste waters. The technology

basis of BPT is to apply these

preliminary treatment technologies

when necessary based on waste water

characteristics.

The following in-process pollution

prevention and water conservation

technologies were included as a basis

for BPT:

—Flow reduction using flow restrictors,

conductivity meters, and/or timed

rinses, for all flowing rinses, plus

countercurrent cascade rinsing for all

flowing rinses;

—Flow reduction using bath

maintenance for all other process

water-discharging operations;

—Centrifugation and 100 percent

recycling of painting water curtains;

—Centrifugation and pasteurization to

extend the life of water-soluble

machining coolants, reducing

discharge volume by 80 percent; and

—In-process metals recovery with ion

exchange followed by electrolytic

recovery of the cation regenerants for

selected electroplating rinses. This

includes first stage drag-out rinsing

with electrolytic metal recovery.

The discharge limitations included in

today’s proposal are based on the

technology discussed above. However, it

is important to note that these

technologies are not mandated under

effluent guidelines and pretreatment

standards. Sites which would be

covered by this proposed rule would be

required to meet the discharge

limitations but would not be required to

use the technology basis discussed

above.

B. BCT

EPA is proposing to establish BCT

limitations equivalent to BPT

limitations.

C. BAT

EPA is proposing to establish BAT

limitations equivalent to BPT

limitations.

D. NSPS

EPA is proposing to establish NSPS

equivalent to BAT limitations.

E. PSES

EPA is proposing to establish PSES

equivalent to BAT limitations. Facilities

with an annual discharge volume less

than 1,000,000 gallons are proposed to

be exempt from PSES. For a site

operating 250 days per year, 1,000,000

gallons per year translates into an

average discharge flow rate of 4,000

gallons per day.

F. PSNS

EPA is proposing to establish PSNS

equivalent to BAT.

IV. Overview of the Industry

A. Industry Description

As discussed above, the MP&M Phase

I Category covers sites that generate

waste water while manufacturing,

maintaining or rebuilding finished

metal parts, metal products, and

machinery EPA within 7 industrial

sectors. See the discussion under

Section II.G. of this notice for the scope

of today’s proposed rule.

MP&M sites perform a wide variety of

process unit operations on metal parts.

For a given MP&M site, the specific unit

operations performed and the sequence

of operations depend on many factors,

including the activity (i.e.,

manufacturing, rebuilding, or

maintenance), industrial sector, and

type of product processed. MP&M sites

that repair, rebuild, or maintain

products often perform preliminary

operations that may not be performed at

manufacturing facilities (e.g.,

disassembly, cleaning, or degreasing to

remove dirt and oil accumulated during

use of the product). Sites that

manufacture products required to meet

very strict performance specifications

(e.g., aerospace or electronic

components) often perform unit

operations such as gold electroplating or

magnetic flux testing that may not be

performed when manufacturing other

products.

EPA identified 47 unit operations as

typical operations performed at MP&M

Phase I sites. The following general

types of unit operations are included in

Phase I of the MP&M Category:

• Metal shaping operations;

• Surface preparation operations;

• Metal deposition operations;

• Organic deposition operations;

• Surface finishing operations; and

• Assembly operations.

Metal shaping operations (e.g.,

machining, grinding, impact and

pressure deformation) are mechanical

operations that alter the form of raw

materials into intermediate and final

product forms. Surface preparation

operations (e.g., alkaline treatment,

barrel finishing and etching) are

chemical and mechanical operations

that remove unwanted materials from or

alter the chemical or physical properties

of the surface prior to subsequent

MP&M operations. Metal deposition

operations (e.g., electroplating, metal

spraying) apply a metal coating to the

part surface by chemical or physical

means. Organic deposition operations

(e.g., painting, corrosion preventive

coating) apply an organic material to the

part by chemical or physical means.

Metal and organic deposition operations

may be performed for reasons such as

protecting the surface from wear or

corrosion, altering the electrical

properties of the surface, or altering the

appearance of the surface. Surface

finishing operations (e.g., chromate

conversion coating, anodizing, sealing)

protect and seal the surface of the

treated part from wear or corrosion by

chemical means. Assembly operations

(e.g., welding, soldering, testing,

assembly) are performed to complete the

manufacturing, rebuilding, or

maintenance process.

Revenues at Phase I MP&M sites range

from less than $10,000 to more than $50

million (in 1989 dollars) annually.

Phase I MP&M sites range in size from

less than 10 employees and waste water

discharge flows of less than 100 gallons

per year to sites with tens of thousands

of employees and waste water discharge
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28217

flows exceeding 100 million gallons per

year. Table 1 presents information on

the waste water discharge flow ranges

for Phase I MP&M sites based on

responses to EPA’s survey (See Section

V.B. below).

TABLE 1.—ESTIMATED DISTRIBUTION OF SITES BY BASELINE RANGE OF FLOW

Flow range (gal/yr/site)

Estimated

number of

sites

Estimated

total flow in

range (millions of gal/

year)

Estimated

total load in

range (millions of lbs/

year)

Estimated

percent of

total sites

Estimated

percent of

total flow

Estimated

percent of

total load

0–10,000 ........................................................................... 3,216 4.6 3.5 30 <1 1

10,000–1,000,000 ............................................................. 5,109 800 150 48 3 8

Greater than 1,000,000 .................................................... 2,276 22,000 1,500 22 97 91

Totals ......................................................................... 10,601 23,000 1,600 100 100 100

Source: 1989 Data Collection Portfolio.

As shown in Table 1, sites discharging

more than 1,000,000 gallons per year

(approximately 22% of the total Phase I

sites) account for approximately 97% of

the total waste water discharge and 91%

of the pollutant load from the industry.

For a site operating 250 days per year,

1,000,000 gallons per year translates

into an average discharge flow rate of

4,000 gallons per day. In contrast, sites

discharging less than 10,000 gallons per

year (approximately 30% of the total

Phase I sites) account for less than one

percent of the overall waste water

discharge flow and approximately one

percent of the pollutant load for the

industry. For a site operating 250 days

per year, 10,000 gallons per year

translates into an average discharge flow

rate of 40 gallons per day.

This regulation applies to process

wastewater discharges from plants or

portions of plants within the MP&M

Phase I industries that manufacture,

maintain, or rebuild finished metal

parts, products or machines from any

basis metal. A ‘‘plant or portion of a

plant’’ is defined to include all activities

or facilities located in a single building

or on a contiguous parcel of property

that are engaged in performing an

MP&M-related industrial function. For

instance, if an entity operates a chrome

plating operation and, on a nonadjoining parcel of property and within

the same fence line, operates a runway

or vehicle maintenance shop, discharges

resulting from these different activities

would not be considered discharges

from a single plant.

EPA seeks comments on how to

define which parcels of property within

the same fence line on a mixed use

property are contiguous. For example,

should properties be divided into a

system of grids with all discharges from

sites within a single sector considered

contiguous? Should discharges from a

single building be treated as a plant or

portion of a plant for purposes of

determining the volume of discharge

subject to regulation? Another option

would be for permit writers to make the

determination case-by-case based on

some degree of proximity between

industrial operations and a practical

application of the requirements for

MP&M Phase I industries (with due

consideration to the amount of MP&M

Phase I wastestream and its

concentration in the overall wastestream

discharged to the treatment works), the

degree to which functions are related,

and such other factors as EPA considers

relevant to the determination.

This definition is relevant in the

determination of the amount of

wastewater generated by a plant and the

applicability of the provisions for small

volume indirect dischargers. It is

particularly important in the case of

federal, state, and local government

agencies or entities that perform highly

varied function, more than one of which

may be an MP&M Phase I or II activity

located in separate areas of the same

facility. For instance, one of the military

services may operate an airfield, a metal

plating facility, and a motor pool. While

each of these facilities would be

considered a plant, it would be illogical

to consider the entire mixed use facility

to be a single plant and to calculate its

discharges collectively.

Unlike the typical industrial plant,

such as an aircraft or electronic

equipment manufacturing plant with

one primary manufacturing activity, the

majority of military installations are

mixed use facilities and more like

municipalities with several small

industries as well as other operations

within their boundaries; they support a

unique and wide variety of functions

and activities, including residential

housing, schools, churches, recreational

parks, shopping centers, industrial

operations, training ranges, airports, gas

stations, utility plants, police and fire

departments, and hospitals. Installations

also include a variety of tenant

activities, including contractor and

other Department of Defense federal

agency activities. Finally, the

geographic size of many military

installations (for example, over 300

square miles at Fort Hood, TX and over

1.1 million acres at the China Lake

Naval Air Warfare Center, CA) makes it

difficult to treat them as a single plant.

Treating military installations or other

mixed use facilities as multiple plants

or portions of plants allows them to take

advantage of any less stringent

requirements for small volume indirect

dischargers without significantly

increasing the threat to human health or

the environment. EPA seeks information

from other facilities that believe they

would fall within this mixed use facility

category.

B. Estimation of Number of MP&M

Phase I Sites

Between 1986 and 1989, EPA

conducted a preliminary study of the

MP&M industry. For this study, EPA

identified over 200 SIC codes pertaining

to sites that would be included in the

MP&M category (including Phase I and

Phase II). Using information from Dun &

Bradstreet, EPA estimated that there

were 970,000 sites within these SIC

codes, including 278,000 with more

than nine employees. This estimate did

not quantify the number of waterdischarging MP&M sites. The basis for

these estimates and a discussion of how

EPA identified the SIC codes included

in the MP&M category are presented in

the Preliminary Data Summary For The

Machinery Manufacturing and

Rebuilding Industry (EPA 440/1–89/106,

October 1989).

As discussed above, to make the

regulatory process for such a large

number of sites more manageable, EPA

decided to divide the MP&M category

into two segments and to develop

effluent guidelines regulations in

phases. This is also described in EPA’s

regulatory plan published on January 2,

1990 (55 FR 80). The industrial sectors
28218 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

in each phase are listed in Section II.G.

Based on the Dun & Bradstreet

estimates, Phase I sectors included

approximately 195,000 sites. EPA used

the information collected from Dun &

Bradstreet to conduct a screener survey

of Phase I manufacturing, rebuilding,

and maintenance sites and Phase II

manufacturing sites. This survey is

described in Section V.B. The results of

this survey indicated that there were

approximately 80,000 MP&M Phase I

sites. The difference between the two

estimates (195,000 sites versus 80,000

sites) was caused primarily by sites

misclassified by Dun & Bradstreet and

sites that had gone out of business.

Approximately 20,000 of the MP&M

Phase I sites were identified by the

screener survey as water-discharging

sites.

EPA used the data collected by the

screener survey to conduct a detailed

survey of water-discharging MP&M

Phase I sites. This questionnaire is

described in Section V.B. This survey

requested detailed information on unit

operations and water use practices. The

results of this survey indicated that

there were an estimated 10,601 MP&M

Phase I water-discharging sites. The

difference between the two estimates of

water-discharging sites was primarily

caused by sites that had misinterpreted

questions on the screener survey.

C. Source Reduction Review Project

Section 6604 of the PPA directs the

Administrator to set up an office for the

purpose, among other things, of

reviewing for the EPA Administrator the

impact that Agency regulations would

have on source reduction (See 42 U.S.C.

13103). This office is to ‘‘consider’’ the

effect of Agency programs on source

reduction efforts and to ‘‘review’’ EPA’s

regulations prior and subsequent to

their proposal to determine their effect

on source reduction.

The Source Reduction Review Project

(SRRP) is a pilot program of the EPA to

promote a source reduction approach in

designing environmental regulations.

The project’s goal is to ensure that

source reduction measures and

implications of rules to other regulatory

programs are fully considered during

development of regulations. To the

extent practicable and consistent with

existing law, and considering costeffectiveness as appropriate, the Agency

will emphasize source reduction as the

basis of its rules. Where source

reduction cannot be implemented, the

Agency will consider recycling, then

treatment and if necessary disposal

technologies and practices as the basis

of its rules. Even in cases where EPA

cannot base its rule on source reduction

practices, the Agency may encourage

the regulated community to consider

using source reduction measures to

comply with rules by providing

information and economic incentives.

To investigate opportunities for source

reduction, EPA will consider source

reduction in every phase of rule

development: data collection, site visits,

bench-scale technology testing,

economic and technical analysis, multimedia impacts and agency and public

reporting.

Since initial data collection for MP&M

preceded the PPA, the Agency did not

collect much information about source

reduction in the industry survey. Since

the survey, the Agency has considered

and evaluated opportunities for source

reduction. In addition, the Office of

Water has coordinated this rule with

efforts by the Office of Air and

Radiation to develop regulations for

halogenated solvents, chromium

electroplating, and others.

The primary sources of waste waters

generated by this industry are waterbased lubricants used in the metal

working (machining or deformation

operations) or process solutions and

rinses associated with surface treatment

operations (cleaning, chemical etching

or surface finishing). These waste waters

afford considerable opportunities for

pollution prevention and water

conservation. As described in Section

VII of this preamble, EPA has studied

and observed a number of pollutionpreventing and/or waste water

conserving practices at a wide range of

metal products and machinery facilities.

This information is included in the

Technical Development Document for

MP&M Phase I. Because of the pollution

prevention opportunities demonstrated

by this industry, the Agency has

included this rule in the SRRP. Some of

the research on waste water treatment

described in the next section focuses on

waste water treatment that also allows

for product recovery.

The SRRP designation for the MP&M

effluent guidelines has prompted EPA to

look more closely at what some of the

likely outcomes would be of applying

the identified candidate BAT

technologies. The Agency has looked

beyond the usual estimation of the cost

expected to be incurred by the industry

to comply with this rule and the

pollutants expected to be removed from

the waste water stream. EPA also has

estimated the savings that might be

realized due to the water conservation

and product recovery practices that are

part of the best available technology. For

example, EPA estimated the savings in

water cost through flow reduction, as

well as the reduction in costs for endof-pipe treatment associated with flow

reduction. EPA also estimated the cost

savings from recovery of metals through

electrolytic recovery, and savings in

virgin coolant from reduction of coolant

discharge through centrifugation and

pasteurization.

V. Data Gathering Efforts

A. Databases

In developing the MP&M effluent

guidelines, EPA evaluated the following

data sources:

• EPA/EAD databases from

development of effluent guidelines for

other metals industries;

• The Office of Research and

Development (ORD) Risk Reduction

Engineering Laboratory (RREL)

treatability database;

• The Fate of Priority Pollutants in

Publicly Owned Treatment Works (50

POTW Study) database;

• The Domestic Sewage Study; and

• The Toxics Release Inventory (TRI)

database.

These data sources and their uses for the

development of the MP&M Phase I

effluent guidelines are discussed below.

EPA has promulgated effluent

guidelines for 13 metals industries (See

Section II.F. above). In developing these

effluent guidelines, EPA collected waste

water samples to characterize the unit

operations and treatment systems at

sites in these industries. Many of the

sampled unit operations and treatment

systems are operated at MP&M sites;

therefore, EPA evaluated these data for

transfer to the MP&M effluent

guidelines development effort.

For the MP&M Phase I pollutant

loading and waste water

characterization efforts, EPA reviewed

the data collected for unit operations

performed at both MP&M sites and at

sites in other metals industries. EPA

reviewed the Technical Development

Documents (TDDs), sampling episode

reports (SERs), and supporting record

materials for the other metals industries

to identify available data. EPA

transferred data for unit operations that

met the following two criteria:

• The unit operation was performed at

MP&M Phase I sites; and

• EPA had not collected data for the

unit operation from MP&M sites.

EPA keypunched the data into a

database, which was combined with the

data collected from the MP&M sampling

program.

For the MP&M technology

effectiveness assessment effort, EPA

reviewed data collected to characterize

treatment systems sampled for the

development of effluent guidelines for
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28219

other metals industries. For several

previous effluent guidelines, EPA used

treatment data from metals industries to

develop the Combined Metals Data Base

(CMDB), which served as the basis for

developing limits for these industries.

EPA also developed a separate database

used as the basis for limits for the Metal

Finishing category. EPA used the CMDB

and Metal Finishing data as a guide in

identifying well-designed and welloperated MP&M treatment systems. EPA

did not use these data in developing the

MP&M technology effectiveness

concentrations, since sufficient data

were collected from MP&M Phase I sites

to develop technology effectiveness

concentrations.

EPA’s Office of Research and

Development (ORD) developed the Risk

Reduction Engineering Laboratory

(RREL) treatability database to provide

data on the removal and destruction of

chemicals in various types of media,

including water, soil, debris, sludge,

and sediment. This database contains

treatability data from publicly owned

treatment works (POTWs) for various

pollutants. This database includes

physical and chemical data for each

pollutant, the types of treatment used to

treat the specific pollutants, the type of

waste water treated, the size of the

POTW, and the treatment

concentrations achieved. EPA used this

database to assess removal by POTWs of

MP&M pollutants of concern.

In September, 1982, EPA published

the Fate of Priority Pollutants in

Publicly Owned Treatment Works (EPA

440/1–82/303), referred to as the 50

POTW Study. The purpose of this study

was to generate, compile, and report

data on the occurrence and fate of the

129 priority pollutants in 50 POTWs.

The report presents all of the data

collected, the results of preliminary

evaluations of these data, and the results

of calculations to determine:

• The quantity of priority pollutants in

the influent to POTWs;

• The quantity of priority pollutants

discharged from the POTWs;

• The quantity of priority pollutants in

the effluent from intermediate process

streams; and

• The quantity of priority pollutants in

the POTW sludge streams.

EPA used the data from this study to

assess removal by POTWs of MP&M

pollutants of concern.

In February, 1986, EPA issued The

Report to Congress on the Discharge of

Hazardous Wastes to Publicly Owned

Treatment Works (EPA 530-SW-86-004),

referred to as the Domestic Sewage

Study (DSS). This report, which was

based in part on the 50 POTW Study,

revealed a significant number of sites

discharging pollutants to POTWs which

are a threat to the treatment capability

of the POTW. These pollutants were not

regulated by national effluent

regulations. Some of the major areas

identified were in the metals industries

areas, particularly an area called

‘‘equipment manufacturing and

assembly.’’ This category included sites

which manufacture such products as

office machines, household appliances,

scientific equipment, and industrial

machine tools and equipment. The DSS

estimated that the ‘‘equipment

manufacturing and assembly’’ category

discharges 7,715 metric tons per year of

priority hazardous organic pollutants

which are presently unregulated. Data

on priority hazardous metals discharges

were unavailable for this category.

Further review of the DSS revealed

other categories which were related to

metals industries, namely the motor

vehicle category, which includes

servicing of new and used cars and

engine and parts rebuilding; and the

transportation services category, which

includes railroad operations, truck

service and repair, and aircraft servicing

and repair. EPA used the information in

the DSS in development of the

Preliminary Data Summary (PDS) for the

MP&M category.

The Toxics Release Inventory (TRI)

database contains specific toxic

chemical release and transfer

information from manufacturing

facilities throughout the United States.

This database was established under the

Emergency Planning and Community

Right-to-Know Act of 1986 (EPCRA),

which Congress passed to promote

planning for chemical emergencies and

to provide information to the public

about the presence and release of toxic

and hazardous chemicals. Each year,

manufacturing facilities meeting certain

activity thresholds must report the

estimated releases and transfers of listed

toxic chemicals to EPA and to the state

or tribal entity in whose jurisdiction the

facility is located. The TRI list includes

more than 300 chemicals in 20 chemical

categories.

EPA considered use of the TRI

database for development of the MP&M

effluent guidelines. However, EPA did

not use TRI data on waste water

discharges from MP&M sites because

sufficient data were not available for

effluent guidelines development. For

example, in development of the MP&M

effluent guidelines, production data

were used that could be linked directly

to pollutant loadings. This information

was used to normalize pollutant

loadings to production. The linked

production and pollutant loadings data

are not available in the TRI database.

EPA also did not use the data on waste

water discharges because many MP&M

Phase I sites do not meet the reporting

thresholds for the TRI database.

B. Survey Questionnaires

EPA surveyed the metal products and

machinery industry through two survey

instruments pursuant to Section 308 of

the Act. The first survey was titled

‘‘1989 Machinery Manufacturing and

Rebuilding Mini Data Collection

Portfolio’’ (OMB No. 2040-0148) or

MDCP. The MDCP was sent to a random

sample of 8,342 MP&M facilities,

stratified within sector by Standard

Industrial Classification (SIC) code.

Facilities were classified by SIC code

strata based on Dun & Bradstreet data.

The sample size determination for each

strata was based on the use of a

coefficient of variation (CV)

minimization procedure. The basic goal

of the CV procedure was to minimize

the number of facilities needed for the

survey, subject to the condition that the

separate strata variances would not be

too large. The CV minimization

procedure is described in the ‘‘Data Base

Summary Report for the Metal Products

and Machinery Mini Data Collection

Portfolio.’’ A name and address list of

sites was purchased from Dun &

Bradstreet. This list included more than

twice the number of sites specified by

the CV procedure (for a total of

approximately 22,110 sites). Within

each SIC code, Dun & Bradstreet

randomly selected the requested

number of sites from the Dun &

Bradstreet data base.

EPA reviewed the Sites listed for each

SIC code and deleted sites from the

mailing list for the following three

reasons: (1) Sites had SIC codes which

were inconsistent with company names,

(2) sites were corporate headquarters, or

(3) sites had insufficient mailing

addresses. After this review, EPA

randomly selected sites to receive the

MDCP.

The purpose of the MDCP was to

characterize the industry, help in the

selection of sites to receive a more

detailed questionnaire, and to estimate

the number of MP&M sites in the

country. To characterize sites engaged

in MP&M activities, the MDCP

requested the following site-specific

information:

• Name and address;

• Contact person;

• Parent company;

• Industrial sectors in which the site

manufactures, rebuilds or maintains

machines or metal components;

• SIC codes corresponding to products

at the site;
28220 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

• Number of employees;

• Annual revenues;

• Unit operations performed at the site;

• Process water use and waste water

discharge for each unit operation

performed at the site; and

• Base metals on which each unit

operation is preformed.

EPA sent the MDCP to randomly

selected MP&M Phase I sites engaged in

manufacturing, rebuilding, or

maintenance operations. The MDCP was

also sent to selected MP&M Phase II

manufacturing sites to characterize the

interfaces between MP&M phases. The

MDCP was not sent to sites with SIC

codes indicating that the sites were

engaged in MP&M Phase II rebuilding or

maintenance operations.

The MDCP survey estimated that

approximately 80,000 sites were

engaged in Phase I sector activities. The

majority of these sites were engaged

only in Phase I sectors, since the

majority of the MDCPs were sent to sites

within Phase I sectors. The remainder of

the sites were phase overlapped sites

(engaged in industrial sectors in both

Phase I and II) or Phase II only sites.

Some of the smaller sites could have

been misclassified as to their industrial

sector based on the results of the MDCP,

because the sites did not know their SIC

code. Uncertainty as to SIC code is one

of the reasons that EPA is not proposing

to define the MP&M Phase I

applicability in terms of SIC codes. Less

than half of all engaged sites were

estimated to be water users, and less

than one-fourth were estimated to be

water dischargers. Sites with operations

in both Phase I and II (‘‘overlap sites’’)

were more likely to use water than sites

engaged only in Phase I activities (50%

vs. 35%). This may be partly because

overlap sites were on average larger

with respect to number of employees

and revenues than sites engaged in

Phase I activities only. In general, larger

sites were more likely to use water than

smaller sites. Nonconfidential

information from the MDCPs is

included in the MP&M public record.

The second questionnaire, entitled

‘‘1989 Machinery Manufacturing and

Rebuilding Data Collection Portfolio

(DCP)’’ (OMB No. 2040–0148), was

designed to collect detailed technical

and financial information from waterusing MP&M sites. Eight hundred

ninety-six questionnaires were mailed

in January 1991. Because a number of

questionnaires were returned

undelivered, an additional 124

questionnaires were mailed in January

and February 1991, for a total of 1,020.

EPA assumed that the undelivered DCP

questionnaires represented sites that

had gone out of business since the

MDCP survey.

The DCP was divided into six parts:

• General information;

• Process information;

• Water supply;

• Waste water treatment and discharge;

• Process and hazardous wastes; and

• Financial and economic information.

The general information was

requested to identify the site, to

characterize the site by certain

parameters (including number of

employees, age, and location), and to

confirm that the site was engaged in

MP&M activities.

The process information requested

included details on products,

production levels, unit operations,

activity, water use for unit operations,

waste water discharge from unit

operations, miscellaneous waste water

sources, pollution prevention or water

conservation practices, and air pollution

control for unit operations.

The water supply section requested

the site to specify the source of water,

average intake flow, average intake

operating hours, and the percentage of

water used for MP&M operations.

EPA requested detailed information

on the waste water treatment systems

used and the discharge volumes

(including residuals), including a block

diagram of the waste water treatment

system; self-sampling monitoring data;

and capital and operating cost data

(including treatment chemical usage).

The fifth section of the questionnaire

requested detailed information on the

types, amounts and composition of

solid/hazardous wastes generated

during production to evaluate the types

and amounts of pollutants currently

discharged, the amount of pollutants

that are contract-hauled off-site, and the

cost of hauling pollutants.

The sixth section requested

information on the site’s finances and

corporate structure.

EPA selected sites to receive the DCP

based on the responses obtained by the

MDCP and other factors. Three

population groups formed the basis of

the survey of this industry.

1. Water-discharging Phase I and

overlap MDCP sites;

2. Water-using Phase I and overlap

MDCP sites that do not discharge

process water; and

3. Key water-discharging MP&M

Phase I and overlap sites that did not

receive the MDCP (discussed further

below).

EPA sent DCP’s to all 860 Phase I and

overlap water-discharging MDCP sites to

characterize the potential variations in

unit operations performed and water

use practices among sites in the MP&M

industry.

In addition, a random sample of 50

MDCP recipients that use but do not

discharge process water was selected by

EPA to receive the DCP in order to

provide information on potential zerodischarge unit operations. EPA selected

these sites to obtain information on

water-use practices from sites that use

but do not discharge process water, and

to determine if ‘‘zero-discharge’’

practices employed at those sites may be

used at other MP&M sites. An additional

24 MDCP recipients that use but do not

discharge process water were selected

by EPA. These sites were selected to

provide information on specific unit

operations expected at each site.

Eighty-six sites that did not receive

the MDCP were selected by EPA to

receive the DCP. These sites represent

key MP&M companies that were not

selected as DCP recipients based on the

MDCP responses. EPA’s intent in

selecting these sites was to characterize

leading companies in the MP&M

category. The key companies were

identified from the Dun & Bradstreet

company listings, the Thomas Register,

and MP&M site visits. These key

companies reported annual revenues of

$50 million or more or were recognized

by the EPA to be leading companies in

their particular sector. Each company

was contacted to identify sites within

the company that were engaged in

MP&M activities and used process water

to perform MP&M unit operations. The

one or two sites believed to perform the

most water-using MP&M unit operations

from each key company were selected to

receive the DCP. Non-confidential

information contained in the DCPs are

included in the public record.

C. Waste Water Sampling and Site Visits

EPA visited 98 MP&M sites between

1986 and 1993 to collect information

about MP&M unit operations, water use

practices, pollution prevention and

treatment technologies and waste

disposal methods, and to evaluate sites

for potential inclusion in the MP&M

sampling program. In general, EPA

selected sites for visits to encompass the

range of sectors, unit operations, inprocess source reduction and recycling

practices, and treatment operations

within the MP&M industry. EPA’s site

visits encompassed sites in both Phase

I and II but focused primarily on Phase

I sites. EPA also performed site visits at

military installations, government

owned and operated sites, and

government owned contractor operated

sites. In addition, EPA visited four job

shop electroplating sites that performed
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28221

in-process source reduction and

recycling technologies.

EPA selected sites from information

contained in the MDCPs and DCPs, and

also through contacts with EPA regional

personnel, state environmental agency

personnel, local pretreatment

coordinators, and pollution prevention

and technical assistance providers.

These personnel helped EPA identify

MP&M sites believed to be operating inprocess source reduction and recycling

technologies or end-of-pipe waste water

treatment technologies.

To ensure that EPA selected sites that

encompassed the range of sectors and

unit operations within the MP&M

industry, the Agency used the following

general criteria as part of the basis for

selecting sites for visits:

1. The site performed MP&M unit

operations in an industrial sector in which

sites had not previously been visited.

2. The site performed MP&M unit

operations that had not been observed during

previous site visits.

3. The site had water use practices that

were believed to be representative of the

site’s industrial sector.

4. The site operated in-process source

reduction, recycling, or end-of-pipe treatment

technologies considered in the development

of the MP&M technology options.

EPA visited sites of various sizes,

with waste water flows ranging from

less than 200 gallons/day to more than

1,000,000 gallons/day.

EPA collected detailed information

from the sites visited such as unit

operations performed and the types of

metals processed through these

operations, purpose of the unit

operation and any waste water

associated with it, and in-process source

reduction and water conservation

practices as well as whether these

source reduction practices caused any

cross-media impacts. Also collected

during the site visits were information

on the end-of-pipe treatment

technologies and, if the facility was a

candidate for sampling, the logistics of

collecting samples. All nonconfidential

information collected during site visits

are included in the public record.

The Agency conducted waste water

sampling at 27 sites between 1986 and

1993. EPA sampled at least two sites in

each of the seven MP&M Phase I sectors,

as well as several sites in Phase II

sectors. EPA also sampled waste water

at one job shop electroplating site to

characterize surface treatment

operations and end-of-pipe treatment

systems that were comparable to MP&M

unit operation and treatment systems.

EPA selected sites for sampling for

reasons such as the following:

• The site performed MP&M unit operations

that had not been sampled at other sites;

• The site processed metals through MP&M

unit operations for which the metal/unit

operation combination had not been

sampled at other sites;

• The site performed in-process source

reduction recycling, or end-of-pipe

treatment technologies that were

considered for technology option

development; or

• The site performed unit operations in a

sector in which samples had not

previously been collected.

EPA sampled sites with waste water

flows ranging from less than 200

gallons/day to greater than 600,000

gallons/day.

During sampling, EPA collected

samples of both raw (untreated) waste

water and treated waste water,

frequently across individual unit

treatment operations, to characterize the

performance of the entire treatment

system. In addition, EPA gathered flow

data corresponding to each sample, and

design and operating parameters for

source reduction, recycling and

treatment technologies. EPA also

collected samples of unit operations to

determine pollutant loadings at the unit

operation level as well as flow and

production data corresponding to each

sample. All data collected during the

sampling episodes are included in the

sampling reports which are in the

rulemaking record.

D. EPA Bench Scale Treatability Studies

(Terpene Study)

Terpenes are a broad classification of

10, 15, 20 or 30 carbon-atom

compounds and derivatives produced

from citrus fruits, wood turpentine, and

wood pulp byproducts. Increasingly,

these compounds are being used in

industrial cleaning formulations

designed for printed circuit board

defluxing and metal degreasing

operations. The popularity of these

terpene-based cleaners is based

primarily on their ability to replace the

usage of suspected ozone-depleting

chemicals such as 1,1,1-trichloroethane

and 1,1,2-trichloro-1,2,2-trifluoroethane

(e.g., CFC-113).

In general, the use of terpene-based

cleaners in these applications is

considered environmentally preferable

to chlorinated solvents. However,

studies conducted by EPA’s Office of

Toxic Substances (OTS) indicate that

substitution of chlorinated solvents with

terpene-based cleaners will result in

increased discharges of these chemicals

to waste water from these industrial

operations. The OTS studies also

identified potential aquatic toxicity

concerns associated with several

specific terpene compounds. These

concerns, combined with the fact that

most industrial facilities engaged in

printed circuit board defluxing and

metal cleaning operations discharge

their waste water into public sewers,

created the need to better understand

the fate of terpene compounds in a

typical municipal waste water treatment

system.

EPA’s Risk Reduction Engineering

Laboratory (RREL) conducted a study to

quantify the fate of specific terpene

compounds in the activated sludge

waste water treatment process. The

study was conducted using pilot-scale

equipment at EPA’s Test and Evaluation

(T&E) Facility in Cincinnati, Ohio. The

specific goal of the research was to

establish the percentage of the terpene

mass entering a typical activated sludge

process that is (1) biodegraded, (2)

partitioned to waste sludge, (3)

volatilized to air, and/or (4) passed

through the treatment process

unchanged.

This study on the fate of specific

terpene compounds in the activated

sludge waste water treatment process

produced the following conclusions:

• The primary fate of d-limonene and

terpinolene in a typical municipal waste

water treatment process (primary clarifier/

activated sludge) is biodegradation

followed by sorption onto primary clarifier

solids and volatilization.

• The activated sludge process typically

produces d-limonene and terpinolene

effluent concentrations below 10 μg/L,

corresponding to influent concentrations as

high as 10,000 μg/L.

EPA’s terpene study was conducted to

determine the treatability of terpene in

municipal waste water treatment

systems. The results of the study

indicate that the primary removal

mechanism for the terpenes studied in

the activated sludge process is

biodegradation. EPA studied terpenes

because they represent one broad class

of compounds in use as replacements

for ozone depleting chlorinated

solvents. A wide variety of non-terpene

compounds are also being used as

solvent substitutes, but these

compounds were not examined in this

study.

VI. Industry Subcategorization

EPA is not proposing to subcategorize

the MP&M Phase I category. EPA

considered a number of potential

subcategorization schemes as described

below, but concluded that no basis

exists for creating subcategories and the

only way to establish a categorical

regulation that could be implemented to

ensure the most effective treatment and

removal of waste water pollutants was
28222 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

to not subcategorize this industrial

category.

The subcategorization factors

considered were based on

subcategorization factors required by the

Clean Water Act, as well as factors that

have been used as a basis for

subcategorization in other metals

industry regulations. These factors

include:

• unit operation;

• activity;

• raw materials;

• products;

• size of site;

• location;

• age;

• economic impacts;

• total energy requirements;

• air pollution control methods; and

• solid waste generation and disposal.

EPA considered subcategorizing the

MP&M Phase I category by unit

operation. EPA identified 47 unit

operations, subsets of which are

typically performed at MP&M sites.

These unit operations can use differing

amounts of water, generate different

pollutant loadings, and can be

performed in different combinations;

however, the resulting waste waters

exhibit general characteristics that allow

the waste waters to be treated by the

technologies on which this proposed

rule is based (See Section IX.).

Subcategorization by unit operation is

technically feasible, but would result in

approximately 47 subcategories with

facilities operating under numerous

subcategories. This would result in a

very complex and unmanageable

regulatory structure. The waste water

characteristics for a given unit operation

are expected to be similar across the

other subcategorization factors listed

above. As a result, EPA is not proposing

to subcategorize by unit operation.

EPA also considered subcategorizing

this industry by activity; i.e.,

manufacturing, rebuilding, and

maintenance. Manufacturing is defined

as the series of unit operations

necessary to produce metal products,

generally performed in a production

environment. Rebuilding is defined as

the series of unit operations necessary to

disassemble used metal products into

components, replace one or more

components or subassemblies or restore

them to original function, and

reassemble the metal product.

Rebuilding is generally performed in a

production environment. Maintenance

is defined as the series of unit

operations, on original or replacement

components, required to keep metal

products in operating condition.

Maintenance is generally performed in a

non-production environment.

Based on the results of the DCP

survey, the estimated percentages of

water discharging Phase I sites

performing each activity are listed

below:

Percent

Manufacturing only ....................... 71

Rebuilding only ............................. 1

Maintenance only .......................... 8

Manufacturing and rebuilding ...... 13

Manufacturing and maintenance .. 2

Rebuilding and maintenance ........ 2

Manufacturing, rebuilding &

maintenance ............................... 3

With the exception of the initial

cleaning steps for rebuilding and

maintenance (discussed below), waste

water characteristics do not vary across

activity. Results of analyses of the DCP

database indicate that the productionnormalized flow (volume of waste water

discharged per unit of production) for

each unit operation does not depend on

the activity. Additionally, for sites

performing multiple activities, the same

unit operations are often used for

multiple activities (e.g., a machining

process may be used to both

manufacture and rebuild parts).

Information collected during site visits

at MP&M Phase I sites supports these

conclusions.

The initial cleaning steps associated

with rebuilding and maintenance may

have unique waste water characteristics

because of the presence of oil, grease,

and grime not present in cleaning

during manufacturing. These pollutants

are present in waste waters generated by

other operations at manufacturing,

rebuilding, and maintenance sites (e.g.,

machining and grinding), and a

technology used to remove these

pollutants (oil-water separation) is

included in the technology options

considered for MP&M Phase I. Based on

analytical data collected at rebuilding

sites, the waste waters from initial

cleaning require additional preliminary

treatment capacity for oil-water

separation, but do not impact the overall

treatability of waste water from

rebuilding sites. The impact of the oil

and grime in the initial cleaning steps

was accounted for in the development

of compliance cost estimates and

pollutant loading estimates. Because the

initial cleaning steps do not impact

waste water treatability, sites

performing these cleaning steps can

achieve the same effluent

concentrations as sites that don’t

perform these steps.

Subcategorization by raw material

may be appropriate when sites process

similar types of raw materials, and these

raw materials dictate a site’s overall

waste water characteristics. Raw

materials at MP&M sites consist of base

metals processed (e.g., bar stock, sheet

stock, ingots, formed parts) and applied

materials (e.g., paint, corrosion

preventive coatings, metal applied

during electroplating, electroless

plating, and metal spraying).

Data from the DCP database and site

visits indicate that the waste water

discharge rates from unit operations are

not dependent on the base metal

processed or material applied. The base

metal or material applied affects the

site’s waste water characteristics;

however, EPA accounted for this in

calculating technology effectiveness

concentrations and pollutant loading

estimates.

Based on the DCP results it is

estimated that more than half of the

MP&M Phase I sites process more than

one type of base metal or metal applied.

The estimated percentages of sites by

the number of metal types processed are

as follows:

Percent

Zero metal types ............................ <1

One metal type .............................. 43

Two metal types ............................ 32

Three metal types .......................... 15

Four metal types ............................ 4

Five or more metal types .............. 6

The metal types processed at MP&M

sites are diverse, and sites periodically

change metal types. At sites processing

multiple metal types, individual unit

operations frequently process more than

one metal type (e.g., a machining

operation can process nickel,

aluminum, and iron parts).

Additionally, not all metal types

processed at a site are processed

through all unit operations. For

example, a site may process aluminum

and iron base metals. Anodizing is

performed on the aluminum, and

electroplating on the iron. Both metals

share the same alkaline and acid

treatments. Subcategorizing by base

metal type would place the anodizing

operation in the aluminum subcategory,

the electroplating operation in the iron

subcategory, and the alkaline and acid

treatments in both subcategories. While

this subcategorization scheme is

possible, the Agency did not select this

approach because the waste water

discharge rates from unit operations are

not dependent on metal type. Also, EPA

considered the effect of metal type on

waste water characteristics in

calculating technology effectiveness

concentrations and pollutant loadings.

EPA considered subcategorizing the

MP&M category by industrial sector

(e.g., aerospace, aircraft, electronic
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28223

equipment, hardware, mobile industrial

equipment, ordnance, and stationary

industrial equipment). However, waste

water characteristics, unit operations,

and raw materials used to produce

products within a given sector are not

always the same from site to site, and

they are not always different from sector

to sector. Within each sector, sites can

perform a variety of unit operations on

a variety of raw materials. For example,

a site in the aerospace sector may

primarily machine aluminum missile

components and not perform any

surface treatment other than alkaline

cleaning. Another site in that sector may

electroplate iron parts for missiles and

perform little or no machining. Waste

water characteristics from these sites

may differ because of the different unit

operations performed and different raw

materials used.

Based on the analytical data collected

for this rule, EPA has found no

statistically significant difference in

industrial waste water discharge among

industrial sectors for cadmium,

chromium, copper, cyanide, lead,

nickel, oil & grease, silver, TSS and

zinc. The analytical data are available in

the public record for this rulemaking.

Most MP&M unit operations are not

unique to a particular sector and are

performed across all sectors. Major

waste water-generating unit operations

(e.g., alkaline treatment, acid treatment,

machining, electroplating) are

performed in all sectors. The unit

operations that are rarely performed

(e.g., abrasive jet machining) are not

performed in all sectors, but are also not

limited to a single sector. Based on the

information obtained from engineering

site visits and sampling episodes, these

unit operations do not affect the overall

treatability of waste waters generated at

sites performing these unit operations.

Therefore, the raw waste waters are

expected to have similar treatability

across the MP&M Phase I sectors.

EPA considered subcategorization of

the MP&M Phase I category on the basis

of site size. Three parameters were

identified as relative measures of MP&M

site size: number of employees,

production, and waste water discharge

flow rate.

Raw materials, unit operations, and

waste water characteristics are

independent of the number of site

employees. A review of the DCP

database shows that productionnormalized flows do not depend on the

number of employees. A correlation

between the number of employees and

waste water generation can be difficult

to develop due to variations in staff.

Fluctuations can occur for many

reasons, including shift differences,

clerical and administrative support,

maintenance workers, efficiency of site

operations, degree of automation, and

market fluctuations. For these reasons,

EPA did not subcategorize by number of

employees.

EPA did not subcategorize by site

production, since the production

through an MP&M Phase I site does not

reflect the production through process

waste water-generating unit operations.

For example, two sites may each process

100 tons of steel annually. One site may

process all of the steel through an

electroplating line, while the other may

perform dry assembly for 95 tons, and

process five tons through a machining

operation. If production through the

entire site were used for

subcategorization, these two sites would

be placed in the same subcategory while

their waste water characteristics would

be different.

EPA did not subcategorize by site

waste water discharge flow rate because

the waste water characteristics for a site

are independent of the overall waste

water discharge flow rate from a site.

Waste water characteristics are

primarily a function of the raw materials

and unit operations at a site, and not the

site’s waste water discharge flow. For

example, a site performing one

machining operation on steel and

discharging 100 gallons per year (gpy) of

waste water would have similar waste

water characteristics as a site with 1,000

machining operations on steel

discharging 100,000 gpy, provided the

sites have similar water use practices. A

review of the DCP database shows that

water use practices, as measured by

production-normalized flow rates, do

not depend on the overall waste water

discharge flow rate from a site. The raw

materials and unit operations also do

not vary by site discharge flow rate.

For sites discharging to publicly

owned treatment works (POTWs), EPA

divided the MP&M Phase I population

by waste water discharge rate to

facilitate implementation (see Section

III.E).

EPA also considered subcategorizing

MP&M facilities on the basis of

economic characteristics of these

facilities. If a group of facilities with

common economic characteristics, such

as revenue size, was in a much better or

worse financial condition than others,

then it might be appropriate to

subcategorize based on economics.

However, analyses of the financial

conditions of facilities showed no

significant pattern of variation across

possible subcategories.

While any group of facilities is likely

to differ from any other group of

facilities, the relevant issue is whether

these differences were random

differences due to the normal variation

characteristic of all MP&M businesses,

or whether these differences were

systematically and predictably related to

some shared economic characteristic.

Linear regression and logistic regression

were used to test for systematic

variations in the financial condition and

performance of subcategories of

facilities grouped according to the

following kinds of economic

characteristics:

• Primary Line of Business: Facilities

were assigned to MP&M sectors

according to the sector in which they

earned most of their revenues. The

financial condition and performance of

facilities across sectors did not vary in

a statistically significant way.

• Customer Type: Responding

facilities indicated the percentage of

revenues they earned from three

customer types, government, domestic

non-government and foreign customers.

When facilities were grouped according

to their dependence on each of these

customer types, statistical analyses

found no significant differences in the

financial condition or performance of

the various groups.

• MP&M Activity: Responding

facilities indicated the percentage of

revenues they earned from each of three

categories of activities (manufacturing,

repairing and rebuilding). Facility

financial performance and condition did

not vary systematically with variations

in dependence on the three categories of

activities.

• Revenue Size: Facilities

subcategorized by revenue size did not

differ in financial condition or

performance in a statistically significant

way.

Appendix D of the Industry Profile of

the Metal Products and Machinery

Industry Phase I documents the

methodology and findings in detail.

This document is in the MP&M public

record. Based on these analyses, EPA

found no reasonable economic basis for

subcategorizing MP&M facilities.

EPA is directed by the Clean Water

Act to consider geographic location as a

potential factor in subcategorizing an

industrial category. The MP&M sites are

generally located all over the country,

however, almost two-thirds are located

east of the Mississippi, with pockets of

sites in Texas and California. EPA

generally found that the sites located in

California had installed more water

conservation equipment and were

generally more sensitive to water

consumption concerns than the sites

located in the rest of the country. EPA

expects this is due to the nearly decade

long drought suffered by California
28224 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

during the 1980’s, as well as local

regulations that are often stricter than

other areas of the country. However,

EPA did not find this limited water

conservation a sufficient basis for

subcategorization.

Other factors that EPA is directed to

consider by the Clean Water Act include

total energy requirements, non-water

quality considerations, and age of

facilities. Energy requirements vary

widely throughout the MP&M Phase I

category; however, EPA did not

subcategorize by this factor because the

energy requirements are not directly

related to waste water characteristics.

Energy costs resulting from this

regulation were accounted for in the

economic impact assessment for this

regulation. Non-water quality

considerations include solid waste and

air pollution generation. EPA did not

subcategorize by these factors because

solid waste and air pollution

characteristics and generation rates

depend on the raw materials processed

and unit operations performed at MP&M

sites, and are not directly related to

waste water characteristics. The nonwater quality impacts and costs of solid

waste and air pollution control

associated with this regulation were

considered in the economic analysis

and regulatory impact analysis for this

regulation.

EPA did not subcategorize by age of

facility because site age does not

account for differences in raw waste

water characteristics. The percentage of

sites by the decade in which they were

built is listed below. This information is

based on the DCP respondents that

reported the date in which their facility

was built:

Percent

Before 1920 .................................... 4

1920 through 1929 ......................... 3

1930 through 1939 ......................... 2

1940 through 1949 ......................... 8

1950 through 1959 ......................... 8

1960 through 1969 ......................... 13

1970 through 1979 ......................... 40

1980 through 1989 ......................... 21

1990* .............................................. 1

* The DCP was mailed on January 2, 1991.

The majority of the sites have been

built since 1960. The DCP respondents

reported a wide range of ages; however,

based on information in the DCPs and

from site visits, MP&M Phase I sites

continually modernize to remain

competitive. For example, several sites

visited that were built before 1960 had

recently installed either new

electroplating lines with in-process

pollution control technologies or inprocess pollution control technologies

on existing electroplating lines. Another

site which was initially built before

1940 had recently installed a new heat

treating process. This type of

modernization is typical in the MP&M

Phase I industry. Modernization of

production processes and pollution

control equipment produces similar

wastes among all sites of various ages

that are performing similar types of

operations; therefore, site age does not

account for differences in the raw waste

water characteristics and was not

selected as a basis for subcategorization.

VII. Water Use and Waste Water

Characteristics

A. Waste Water Sources and

Characteristics

The unit operations included in the

MP&M category can be classified by

water use practices into those that

typically use process water and

discharge process waste water, unit

operations that typically either do not

use process water or use process water

but do not discharge waste water, and

miscellaneous operations reported in

DCP responses by fewer than five

MP&M sites.

Process waste water includes any

water that, during manufacturing or

processing, comes into direct contact

with or results from the production or

use of any raw materials, intermediate

products, finished products, byproducts, or waste products. Process

waste water includes waste water from

wet air pollution control devices. Noncontact cooling water is not considered

a process waste water. Non-aqueous

wastes used as processing liquids, such

as spent solvents or quench oil, are also

not considered process waste waters.

As discussed below, waste waters

from the operations that use process

water have different characteristics

depending on the unit operation from

which they are derived. First, oilbearing waste waters are typically metal

shaping coolants and lubricants, surface

preparation solutions used to remove oil

and dirt from components, and

associated rinses. Some examples of oilbearing waste waters are: machining and

grinding coolants and lubricants;

pressure and impact deformation

lubricants; dye penetrant and magnetic

flux testing; and alkaline cleaning

solutions and rinses used to remove oil

and dirt. These waste waters typically

require preliminary treatment to remove

oil. Chemical emulsion breaking

followed by oil skimming is typically

used for this treatment. Membrane

separation technologies are also used for

oil removal.

Second, hexavalent chromiumbearing waste water typically consists of

concentrated surface preparation or

metal deposition solutions, sealants,

and associated rinses. Some examples of

hexavalent chromium-bearing waste

waters are: chromic acid treatment

solutions and rinses; chromate

conversion coating solutions and rinses;

and chromium electroplating solutions

and rinses. These waste waters typically

require preliminary treatment to reduce

the hexavalent chromium to trivalent

chromium for subsequent chemical

precipitation and settling. Sodium

metabisulfite is typically used for this

reduction.

Third, process waste waters that

contain cyanide are typically generated

by surface preparation or metal

deposition solutions and their

associated rinses. Two examples of

cyanide-bearing waste waters are:

cyanide-bearing alkaline treatment

solutions and rinses (typically used as a

surface treatment step prior to

electroplating with cyanide solutions)

and cyanide-bearing electroplating

solutions and rinses. These waste waters

typically require preliminary treatment

to destroy cyanide and facilitate

subsequent chemical precipitation and

settling. Sodium hypochlorite is

typically used for this treatment.

Fourth, process waste waters that

contain complexed metals are typically

concentrated surface preparation or

metal deposition solutions and their

associated rinses. Complexed metalbearing waste waters are usually

generated at MP&M sites by electroless

plating operations and their rinses.

These waste waters require preliminary

treatment to break the complexes for

subsequent chemical precipitation and

settling.

Finally, virtually all of the MP&M

process waste waters contain some

metallic pollutants. The most

concentrated metal bearing waste waters

include metal shaping solutions, surface

preparation solutions, metal deposition

solutions, and surface finishing

solutions. Chemical precipitation

(usually with either lime or sodium

hydroxide) and settling is typically used

for metals removal. Coagulants and

flocculants may be added to assist

chemical precipitation and settling.

B. Pollution Prevention, Recycle, Reuse

and Water Conservation Practices

The data gathered to support this rule

indicate that a number of pollution

prevention and water conservation

practices exist in the MP&M industries.

Some of these pollution prevention,

recycling, and water conservation

practices were determined to be broadly

applicable to the MP&M category, and
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28225

these were included in the technology

options (see Section III.A.).

A large number of additional

pollution prevention practices were site

specific and could not be used as the

basis for a national standard. However,

EPA considers it important to make this

site specific pollution prevention

information available for possible use by

MP&M sites. Therefore, the Technical

Development Document contains a

bibliography of the pollution prevention

practices identified during the

development of this rule. EPA’s

proposed flow guidance also discusses

the applicability of the more prevalent

pollution practices identified in this

category.

VIII. Approach for Estimating Costs

and Pollution Reductions Achieved by

Waste Water Control Technology

EPA estimated industry-wide

compliance costs and pollutant loadings

using model sites based on DCP

respondents and a computerized design

and cost model for the MP&M

technology options. Industry-wide costs

and pollutant loadings were estimated

for three technology options based on

technologies designed for 396 model

sites. Statistically calculated weights

were used to scale those results to the

estimated 10,601 MP&M Phase I sites

nationwide which are expected to incur

costs under the regulation.

The 396 model sites were a subset of

the 860 sites which indicated that they

were water dischargers on their MDCP

survey response. Six hundred seventy

five of these sites returned the

subsequent DCP and their responses

were entered into the DCP database. Of

these 675 sites in the DCP database, 396

were chosen to be model sites for the

following reasons:

• The site generated revenue from a

Phase I sector, as determined from the

economic section of the DCP (for some

sites, an economic sector was not

identified; therefore, the sector

identified in the technical section of the

DCP was used); and

• The site supplied sufficient

economic and technical data to estimate

compliance costs and pollutant loadings

of the MP&M technology options.

Each of the 396 sites selected was

assessed to determine the unit

operations, waste water characteristics

and treatment technologies currently in

place at the sites.

Based on the information provided by

the sites in their DCP responses, followup letters, and phone calls, each waste

water stream was classified by the type

of unit operation (e.g., machining,

electroplating, acid treatment, etc.) and

base metal type (e.g., steel, aluminum,

zinc, etc.). The following additional

DCP data were used to characterize

process waste water streams: waste

water discharge flow rate, production

rate, operating schedule, and discharge

destination. Many of the 396 sites

provided these data for all waste water

streams generated on site. For sites that

did not provide complete data, the

missing data were either estimated

based on technical considerations

specific to the site, or were statistically

imputed. The concentration of each

pollutant in each waste water stream

was modelled from field sampling of

waste water discharges from the unit

operation/metal type combinations at

other MP&M sites. DCP responses were

used to identify the following

information about end-of-pipe

technologies in place at MP&M sites: the

types of treatment units in place; the

unit operations discharging process

waste water to each treatment unit; and

the operating schedule of each treatment

unit.

A computerized design and cost

model was developed to estimate

compliance costs and pollutant loadings

for the MP&M technology options,

taking into account each site’s level of

treatment in place. The model was

programmed with technology-specific

modules which calculated the costs for

various combinations of technologies as

required by the technology options and

the model site waste water stream

characteristics. Design and cost data

were based on MP&M site data,

literature data, and vendor data.

Technology-specific cost modules

were developed for the in-process

pollution prevention and water use

reduction technologies and end-of-pipe

treatment technologies discussed in

Section IX below. The model provided

the following types of information for

each technology designed for a model

site:

• Capital costs;

• Operating and maintenance costs;

• Electricity used and associated cost;

• Sludge generation and associated

disposal costs;

• Waste oil generation and associated

disposal costs;

• Water use reduction and associated

cost credit;

• Metal reclaimed and associated cost

credit;

• Chemical usage reduction and

associated cost credit;

• Effluent flow rate; and

• Effluent pollutant concentrations.

If contract hauling of waste water for

off-site treatment and disposal was less

costly than on-site treatment, EPA

estimated costs assuming the model site

would contract haul the waste water.

EPA made this assessment on a

technology-specific basis.

After estimation of capital and

operating and maintenance costs, the

total capital investment (TCI), total

annualized cost (TAC), and monitoring

costs were calculated. Sites that

reported being regulated by categorical

limitations and standards were assumed

to currently incur some monitoring cost.

IX. Best Practicable Control Technology

Currently Available

A. Need for BPT Regulation

The MP&M Phase I regulation is

estimated to potentially apply to 10,601

facilities nationwide. Although there are

a number of metal processing

categorical effluent guidelines that also

apply to some operations performed at

MP&M sites, these other effluent

guidelines only affect approximately

2,000 MP&M Phase I sites. Thus, a large

number of MP&M Phase I facilities do

not have any effluent limitations

guidelines. EPA estimates that 1,895

MP&M sites that are direct dischargers

currently discharge substantial

quantities of pollutants into the surface

waters of the United States, including

18 million pounds per year of oil and

grease, 2.6 million pounds per year of

total suspended solids, 0.56 million

pounds per year of priority pollutants,

and 0.6 million pounds per year of

nonconventional metal pollutants. EPA

estimates that the proposed BPT

limitations will reduce these quantities

to 150,000 pounds per year of oil and

grease, 360,000 pounds per year of total

suspended solids, 40,000 pounds per

year of priority metal pollutants, and

130,000 pounds per year of

nonconventional metal pollutants.

B. BPT Technology Options and

Selection

EPA considered three regulatory

options on which to base BPT

limitations.

1. Option 1: Lime and Settle

Treatment. Option 1 consists of

preliminary treatment for specific

pollutants and end-of-pipe treatment

with chemical precipitation (usually

accomplished by raising the pH with an

alkaline chemical such as lime or

caustic to produce insoluble metal

hydroxides) followed by clarification.

This treatment, which is also commonly

referred to as lime and settle treatment,

has been widely used throughout the

metals industry and is well documented

to be effective for removing metal

pollutants. As with a number of

previously promulgated regulations,

EPA has established BPT on the basis
28226 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

that all process waste waters, except

solvent bearing waste waters, will be

treated through lime and settle end-ofpipe treatment.

All of the regulatory options

considered for the MP&M category are

based on a commingled treatment of

process waste waters through lime and

settle with preliminary treatment when

needed for specific waste streams.

Preliminary treatment is performed to

remove oil and grease through emulsion

breaking and oil skimming; to destroy

cyanide using sodium hypochlorite; to

reduce hexavalent chromium to the

trivalent form of chromium which can

subsequently be precipitated as

chromium hydroxide; or to break metal

complexes by chemical reduction. EPA

has also included the contract hauling

of any waste waters associated with

organic solvent degreasing as part of the

Option 1 technology.

Through sampling episodes and site

visits, EPA has determined that some

waste waters, usually alkaline cleaning

waste waters and water-based metal

working fluids (e.g., machining and

grinding coolants, deformation

lubricants), may contain significant

amounts of oil and grease. These waste

waters require preliminary treatment to

remove oil and grease and organic

pollutants. Chemical emulsion breaking

followed by either skimming or

coalescing is an effective technology for

removing these pollutants.

EPA has identified MP&M waste

waters that may contain significant

amounts of cyanide, such as plating and

cleaning waste waters. These waste

waters require preliminary treatment to

destroy the cyanide. This is typically

performed using alkaline chlorination

with sodium hypochlorite or chlorine

gas. EPA has also identified hexavalent

chromium-bearing waste waters, usually

generated by anodizing, conversion

coating, acid treatment, and

electroplating operations and rinses.

These waste waters require chemical

reduction of the hexavalent chromium

to trivalent chromium. Sodium

metabisulfite or gaseous sulphur

dioxide are typically used as reducing

agents. Several surface treatment waste

waters typically contain significant

amounts of chelated metals. These

chelated metals require chemical

reduction to break down the chelated

metals prior to lime and settle. Sodium

borohydride, hydrazine, and sodium

hydrosulfite can be used as reducing

agents. These preliminary treatment

technologies are more effective and less

costly on segregated waste waters, prior

to adding waste waters that do not

contain the pollutants being treated

with the preliminary treatment

technologies. Thus, EPA includes these

preliminary treatment steps whenever it

refers to lime and settle treatment.

2. Option 2: In-process Flow Control,

Pollution Prevention, and Lime and

Settle Treatment. Option 2 builds on

Option 1 by adding in-process pollution

prevention, recycling, and water

conservation methods which allow for

recovery and reuse of materials.

Techniques or technologies, such as

centrifugation or skimming for metal

working fluids, or ion exchange for

electroplating rinses, can save money

for companies by allowing materials to

be used over a longer period before they

need to be disposed. These techniques

and technologies also can be used to

recover metal or metal treatment

solutions. Using these techniques along

with water conservation also leads to

the generation of less pollution and

results in more effective treatment of the

waste water that is generated. As has

been demonstrated by numerous

industrial treatment systems, the

treatment of metal bearing waste waters

is relatively independent of influent

concentration. For example, the welloperated lime and settle treatment

system can achieve the same effluent

concentration with an influent stream of

1,000 gallons per minute (gpm) and 10

parts per million (ppm) as it can achieve

with an influent stream which is 500

gpm and 20 ppm. In fact, within a broad

range of influent concentrations, the

more highly concentrated waste water

influent, when treated down to the

technology effectiveness concentrations

of a lime and settle treatment system,

results in better pollutant removals and

less mass of pollutant in the discharge.

In addition, the cost of a treatment

system is largely dependent on the size,

which in turn is largely dependent on

flow. As a result, the lower the flow of

water to the treatment system the less

costly the system. Option 2 in-process

technologies include:

• Flow reduction using flow restrictors,

conductivity meters, and/or timed rinses, for

all flowing rinses, plus countercurrent

cascade rinsing for all flowing rinses;

• Flow reduction using bath maintenance

for all other process water-discharging

operations;

• Centrifugation and 100 percent recycling

of painting water curtains;

• Centrifugation and pasteurization to

extend the life of water-soluble machining

coolants reducing discharge volume by 80%;

and

• In-process metals recovery using ion

exchange followed by electrolytic recovery of

the cation regenerant for selected

electroplating rinses. This includes first-stage

drag-out rinsing with electrolytic metal

recovery.

The flow reduction practices included

in Option 2 are widely used by MP&M

sites and are also included as part of the

regulatory basis for a number of effluent

guidelines regulations in the metals

industry.

3. Option 3: Advanced End-of-Pipe

Treatment. Option 3 includes all of the

Option 2 technologies plus advanced

end-of-pipe treatment. Advanced endof-pipe treatment could be either reverse

osmosis or ion exchange to remove

suspended and dissolved solids yielding

a treated waste water that can be

partially recycled as process water. This

technology is not widely used but has

been demonstrated by some MP&M

sites, particularly in instances where the

water supply is contaminated and

requires clean-up before it can be used.

For the purposes of modelling the cost

of compliance and resulting pollutant

removals, Option 3 technology is

expected to achieve a sufficiently clean

treated waste water such that 90 percent

of the treated waste water can be

recycled back to the facility to be reused

in the processing area.

Selected Option. EPA proposes to

establish BPT effluent limitations

guidelines based on Option 2

technologies. Lime and settle treatment

used in conjunction with flow reduction

and pollution prevention technologies

represents the best technology widely

practiced by MP&M sites. EPA proposes

to require permit writers to convert the

concentration-based effluent limitations

guidelines into mass-based permit

limitations based on MP&M flow

guidance from the Technical

Development Document. This document

provides guidance to permit writers on

identifying sites with pollution

prevention and water conservation

technologies equivalent to those

included in Option 2 (e.g.,

electrodialysis, reverse osmosis). EPA

recognizes that there are many different

pollution prevention and water

conservation technologies that may

achieve the same performance as those

included in Option 2; therefore, the

Agency has provided permit writers

guidance on assessing these

technologies.

EPA recommends that, for sites with

pollution prevention and water

conservation technologies in place that

are equivalent to those included as the

basis for BPT, permit writers use

historical flow as a basis for converting

the concentration-based limitations to

mass-based. For sites without these

types of technologies in place, EPA

recommends that permit writers do not

use historical flow, but use other tools

listed in the Technical Development

Document (e.g., measuring production
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28227

through unit operations, measuring the

concentration of total dissolved solids

(TDS) in rinse waters) to convert the

concentration-based limitations to massbased. This approach encourages sites to

implement good water use practices and

investigate and install pollution

prevention and water conservation

technologies. By recommending use of

historical flow only when sites have

pollution prevention and water

conservation technologies in place, EPA

expects that permits based on BPT will

reflect pollution prevention and water

conservation technologies. If mass-based

limitations have not been developed as

required, the source shall achieve

discharges not exceeding the

concentration limitations listed in the

regulation.

EPA did not select Option 1 as it does

not reflect the average of the best

technology performance in the industry.

EPA did not select Option 3 technology

as the basis for BPT because the costs do

not justify the removals achieved.

C. Calculation of BPT Limitations

EPA visited 98 sites and sampled

waste waters from 27 MP&M Phase I

sites. In addition to sampling to

characterize the process waste waters,

EPA sampled 23 lime and settle

treatment systems. EPA reviewed the

treatment data gathered and identified

data considered appropriate for

calculating BPT limitations for the

MP&M Phase I industry. EPA identified

data from well-designed and welloperated treatment systems and focused

on data for specific pollutants processed

and treated on site. The data editing

procedures used for this assessment

consisted of four major steps:

1. Assessment of the performance of

the entire treatment system;

2. Identification of process upsets

during sampling that impacted the

treatment effectiveness of the system;

3. Identification of pollutants not

present in the raw waste water at

sufficient concentrations to evaluate

treatment effectiveness; and

4. Identification of treatment

chemicals used in the treatment system.

The evaluation criteria used for each of

these steps are described below. Data

that failed one or more of the evaluation

criteria were excluded from calculation

of the BPT limitations.

1. Assessment of Treatment System

Performance. EPA assessed the

performance of the entire treatment

system during sampling. Data for

systems identified as not being welldesigned or well-operated were

excluded from use in calculating BPT

limitations. EPA first identified the

metals processed on site, as well as if

the site performed unit operations likely

to generate oil and grease and cyanide.

EPA focused on these pollutants

because the treatment trains used as a

basis for the limitations are designed to

treat and remove these pollutants. EPA

then performed the following technical

analyses of the treatment systems:

—Based on the pollutants processed or

treated on site, EPA excluded data from

systems that were not operated at the

proper pH for removal of the pollutants.

—EPA excluded data from lime and settle

systems that did not have solids removal

indicative of effective treatment. In general,

EPA identified as having poor solids

removal systems that did not achieve 90%

removal of total suspended solids (TSS)

and had effluent TSS concentrations

greater than 50 milligrams per liter. Sitespecific exceptions were made to this rule

depending on influent concentrations of

TSS.

—EPA excluded data from lime and settle

systems at which the concentration of most

of the metals present in the influent stream

did not decrease, indicating poor

treatment.

2. Identification of Process Upsets

Occurring During Sampling. EPA

reviewed the sampling episode reports

for each of the sampled sites, and

identified any process upsets that

resulted in poor treatment during one or

more days of the sampling episode. EPA

excluded the data affected by the

process upsets.

3. Identification of Pollutants Not

Present in the Raw Waste water at

Sufficient Concentrations to Evaluate

Removal. EPA excluded data for

pollutants that were not detected in the

treatment influent streams at a site, or

were detected at concentrations less

than 0.1 milligram per liter. EPA also

excluded data for pollutants that were

not processed on site. EPA reviewed the

water use practices for the sampled sites

and excluded data from sites that may

have been diluting the raw waste water

and reducing the concentration of

pollutants processed on site. Because

the MP&M Phase I effluent guidelines

include water conservation practices

and pollution prevention technologies,

EPA reviewed the data to ensure that

the BPT limitations were based on sites

that had these practices and

technologies in place.

4. Identification of Waste water

Treatment Chemicals. EPA identified

treatment chemicals used in each of the

sampled treatment systems to determine

if the removal of the metals used as

treatment chemicals were consistent

with removal of other metals on site,

indicating a well-designed and welloperated system. If a metal was used as

a treatment chemical, and the site

treated the metal to a concentration

consistent with other metals removed

on site, the metal was included in

calculation of the BPT limitations. If the

metal was used as a treatment chemical

and was not removed to a concentration

consistent with other metals removed

on site, the treatment chemical was

excluded from calculation of the

limitations. The data remaining after

these data editing procedures were used

to calculate the BPT limitations.

A detailed description of the

statistical methodology used for the

calculation of limitations is described in

the Technical Development Document.

A summary of the methodology follows.

The calculation of the BPT daily

maximum limitations for pollutants was

performed by the following steps. The

arithmetic long-term mean

concentration was calculated for each

facility representing BPT treatment

technology, and the median of the

means was determined. A modified

delta-lognormal distribution was fit to

daily concentration data from each

facility that had enough detected

concentration values for parameter

estimation. This is the same

distributional model used by EPA in the

final rulemakings for the Organic

Chemicals, Plastics and Synthetic Fibers

(OCPSF) and Pesticides Manufacturing

categories and the proposed rulemaking

for the Pulp and Paper category.

Variability factors were then computed

for each facility distribution, and the

average variability factor was

determined. Finally, the daily maximum

limitation was calculated by

multiplying the median long-term mean

by the average variability factor. The

monthly maximum limitation was

calculated similarly except that the

variability factor corresponding to the

95th percentile of the distribution of

monthly averages was used instead of

the 99th percentile of daily

concentration measurements.

The daily variability factor is a

statistical entity defined as the ratio of

the estimated 99th percentile of the

distribution of daily values divided by

the expected value, or mean, of the

distribution. Similarly, the monthly

variability factor is defined as the

estimated 95th percentile of the

distribution of four-day averages

divided by the expected value of the

monthly averages.

The modified delta-lognormal

distribution models the data as a

mixture of non-detect observations and

measured values. This distribution was

selected because the data for most

analytes consisted of a mixture of

measured values and non-detects. The

modified delta-lognormal distribution

assumes that all non-detects have a
28228 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

value equal to the detection limit and

that the detected values follow a

lognormal distribution.

Table 2 presents the proposed daily

and monthly limitations. In Table 2, the

term ‘‘T’’, as in ‘‘cyanide(T)’’, shall

mean total. The values calculated by the

above procedures were rounded off to

the next highest tenths place for metals,

to the next highest hundredths place for

cyanide, and to the next highest unit

place for TSS and oil and grease.

EPA identified 24 metal types

processed at MP&M Phase I sites.

Because EPA did not have sufficient

data to set limits for all of these metal

types, EPA is regulating aluminum and

iron as indicator metals for removal of

non-regulated metals that may be

processed at MP&M sites. Aluminum is

most effectively removed in lime and

settle systems at a pH between 7.5 and

8 standard units, while iron is most

effectively removed at a pH of

approximately 10.5 standard units. Most

metals that may be present in MP&M

waste waters are effectively removed in

this pH range. Therefore, removal of

aluminum and iron will indicate

effective removal of other metal types.

Although iron and aluminum can be

used as water treatment chemicals, EPA

believes that regulation of these

pollutants will control discharges of

non-regulated metals that are processed

at MP&M sites.

EPA is proposing a pH range limit in

order to assure that the pH of the waste

water is within the neutral range.

EPA is also proposing to use oil and

grease as an indicator for monitoring for

organic pollutants that have the

potential to be present in MP&M waste

waters. EPA is using oil and grease as

an indicator since most of the organic

pollutants detected in MP&M waste

waters during the MP&M sampling

program are more soluble in oil than in

water, and as such would partition to

the oil layer. Thus, removal of oil and

grease will result in significant removal

of these pollutants. Data for oil-water

separation systems collected during the

MP&M sampling program show

removals between 63 and 90 percent for

organic pollutants across the oil-water

separation systems. These data support

the conclusion that the organic

pollutants will partition to the oil layer.

In addition, most of the organic

pollutants detected in MP&M waste

waters are insoluble in water, further

supporting that these pollutants will

partition to the oil layer.

EPA considered establishing

limitations for Total Toxic Organics

(TTO), which would reflect the sum of

concentrations achieved for several

specific organic pollutants identified

during the MP&M sampling program.

However, because of the diversity in the

types of cleaners, coolants, paints, etc.,

used in the MP&M industry, as well as

the current industry trends in

identifying substitutes for organic

solvent degreasing, EPA did not have

sufficient analytical data to identify and

regulate all organic pollutants in use at

MP&M sites. Therefore, EPA rejected

TTO as an approach to controlling

organic pollutant discharges. EPA

believes that use of oil and grease as an

indicator will provide regulatory control

of organic pollutants while allowing the

flexibility to control organic pollutants

that are used by MP&M sites but not

identified during the MP&M sampling

program.

EPA also considered establishing

limitations for lead, since lead is known

to have several adverse human health

effects. Although lead was analyzed for

in nearly all samples collected during

the development of the MP&M Phase I

rule, lead was rarely found at treatable

concentrations in the influent to the

treatment systems sampled. As

discussed above, treatable concentration

was defined as 0.1 milligram per liter in

the raw waste water prior to treatment.

The majority of lead data were nondetects or detects at very low

concentrations. Since lead was rarely

found at treatable concentrations in the

raw waste water, prior to treatment, EPA

decided not to propose a limit for lead.

EPA is soliciting additional data and

comments on the possibility of setting a

limit for lead in the final rule (see

Section XIX).

TABLE 2.—PROPOSED EFFLUENT

CONCENTRATION LIMITATIONS

[Milligrams per liter (mg/l)]

Pollutant or pollutant parameter

Maximum

for any 1

day

Monthly

average

shall not

exceed

Aluminum (T) ........ 1.4 1.0

Cadmium(T) .......... 0.7 0.3

Chromium(T) ......... 0.3 0.2

Copper(T) .............. 1.3 0.6

Iron(T) ................... 2.4 1.3

Nickel(T) ................ 1.1 0.5

Zinc(T) ................... 0.8 0.4

Cyanide(T) ............ 0.03 0.02

Oil & Grease ......... 35 17

TSS ....................... 73 36

pH ......................... (1) (1)

1Within 6.0 to 9.0.

D. Applicability of BPT

The Agency is proposing BPT

limitations guidelines for the MP&M

Phase I category to apply to all MP&M

process waste waters that are generated

by sites performing manufacturing,

rebuilding or maintenance of metal

parts, products, or machinery in one of

the seven industrial sectors (i.e.,

aerospace, aircraft, electronic

equipment, hardware, mobile industrial

equipment, ordnance and stationary

industrial equipment).

E. BPT Pollutant Removals, Costs, and

Economic Impacts

EPA estimates that the proposed BPT

limitations will remove annually an

estimated 20 million pounds of

conventional pollutants (TSS and oil

and grease), 1 million pounds of metals

and cyanide, and 67,000 pounds of

organic pollutants. BPT is estimated to

require a capital expenditure of $63

million (in 1994$), which will require

an annualized cost of $18 million. In

addition, as a result of this regulation,

EPA estimates that 18 sites may close

with an accompanying job loss of 158

full time employees (FTEs). EPA

estimates that compliance activities may

generate annual labor requirements

which could more than offset these job

losses. EPA believes that the effluent

reduction benefits achieved by this

proposed BPT justify the costs and that

all statutory factors have been satisfied.

(See further discussion of costs and

benefits below).

X. Best Conventional Pollutant Control

Technology

A. July 9, 1986 BCT Methodology

The BCT methodology, promulgated

in 1986 (51 FR 24974), discusses the

Agency’s consideration of costs in

establishing BCT effluent limitations

guidelines. EPA evaluates the

reasonableness of BCT candidate

technologies (those that are

technologically feasible) by applying a

two-part cost test:

(1) The POTW test; and

(2) The industry cost-effectiveness

test.

In the POTW test, EPA calculates the

cost per pound of conventional

pollutant removed by industrial

dischargers in upgrading from BPT to a

BCT candidate technology and then

compares this cost to the cost per pound

of conventional pollutant removed in

upgrading POTWs from secondary

treatment. The upgrade cost to industry

must be less than the POTW benchmark

of $0.25 per pound (in 1976 dollars).

In the industry cost-effectiveness test,

the ratio of the incremental BPT to BCT

cost divided by the BPT cost for the

industry must be less than 1.29 (i.e., the

cost increase must be less than 29

percent).
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28229

B. BCT Options Identified

For today’s proposed rule, EPA

considered whether or not to establish

BCT effluent limitation guidelines for

MP&M sites that would attain

incremental levels of effluent reduction

beyond BPT for TSS. The only

technology option identified to attain

further TSS reduction is the addition of

multimedia filtration to existing BPT

systems.

EPA applied the BCT cost test to use

of multimedia filtration technology as a

means to reduce TSS loadings. The

MP&M sites were split into three flow

categories: low flow (generally less than

10,000 gallons per year (gpy)); medium

flow (between 10,000 gpy and 1,000,000

gpy); and high flow (greater than

1,000,000 gpy). For each of these three

flow categories, a representative site was

chosen for which EPA had estimated the

costs of installing the Option 2

technologies discussed under BPT (See

Section IX.B. above). The Agency

evaluated the costs of installing a

polishing multimedia filter to remove an

estimated additional 45 percent of the

TSS discharged after lime and settle

treatment. This estimated removal

reflects the reduced TSS concentrations

seen when filters are used in the MP&M

industry. The cost per pound of the high

flow case was $28/lb of TSS (in 1976

dollars), the cost per pound removed of

the medium flow case was $131/lb and

the cost of the low flow case was $813/

lb of TSS (in 1976 dollars). All of these

cases individually as well as combined

exceed the $0.25/lb (in 1976 dollars)

POTW cost test value. Because these

costs exceed the POTW benchmark, the

first part of the cost test fails; therefore,

the second part of the test was

unnecessary. It was therefore

determined that multi-media filtration

does not pass the cost test for BCT

regulations development. In light of the

above, BCT limitations for MP&M are

proposed to be set equal to BPT

limitations.

Therefore, EPA is proposing to

establish BCT limitations on the basis of

Option 2 technology, equivalent to BPT.

XI. Best Available Technology

Economically Achievable

A. Need for BAT Regulation

The need for BAT regulation is the

same as the need for BPT regulation (see

Section IX.A.).

B. BAT Technology Options and

Selection

The factors considered in establishing

the best available technology

economically achievable (BAT) level of

control include: the age of process

equipment and facilities, the processes

employed, process changes, the

engineering aspects of applying various

types of control techniques, the costs of

applying the control technology,

economic impacts imposed by the

regulation, non-water quality

environmental impacts such as energy

requirements, air pollution and solid

waste generation, and other such factors

as the Administrator deems appropriate

(sec

tion 304(b)(2)(B) of the Act). In general, the

BAT technology level represents the best

existing economically achievable

performance among plants with shared

characteristics. In making the determination

about economic achievability, the Agency

takes into consideration factors such as

plant closures and product line closures.

Where existing waste water treatment

performance is uniformly inadequate, BAT

technology may be transferred from a

different subcategory or industrial category.

BAT may also include process changes or

internal plant controls which are not

common industry practice.

EPA is today proposing BAT effluent

limitations guidelines for all parameters

listed in Table 2 except TSS and pH. Oil

and grease is an indicator for 2-

methylnaphthalene, 2-propanone, Noctadecane, and N-tetradecane.

The three regulatory options which

EPA considered for BAT are identical to

the three options discussed under BPT.

Like BPT, EPA is proposing BAT on the

basis of Option 2. This technology

represents the best available technology

economically achievable. Option 1 was

rejected because it does not include the

pollution prevention and water

conservation technologies which are

widely demonstrated at MP&M sites.

Option 3 was rejected because the costs

do not justify the removals achieved.

EPA did not include the application

of filters, discussed under BCT, as a

BAT option. Data collected during

sampling at MP&M facilities

demonstrated no additional removals of

many metal pollutants resulting from

the use of filters as compared to

concentrations of the same metals after

the lime and settle treatment included

in Option 2. Thus, although filtration is

demonstrated to be effective in

achieving additional removals of

suspended solids, and as such was

considered for the basis of BCT,

multimedia or sand filtration does not

reflect the best available technology

performance for priority and

nonconventional pollutants.

C. Calculation of BAT Limitations

The calculation of the BAT

limitations were performed by using the

same methodology used for calculating

BPT limitations (see Section IX.C.)

D. Applicability of BAT

The applicability of BAT is the same

as that for BPT.

E. BAT Pollutant Removals, Costs, and

Economic Impacts

The pollutant removals for BAT are

the same as those for BPT except that

BAT does not cover TSS (see Section

IX.E.). The estimated cost of BAT is the

same as BPT (see Section IX.E.). The

economic impacts of BAT are the same

as BPT (see Section IX.E.). EPA believes

that the effluent reduction benefits

achieved by this proposed BAT justify

the costs and that all statutory factors

have been satisfied. (See further

discussion of costs and benefits below.)

XII. Pretreatment Standards for

Existing Sources

A. Need for Pretreatment Standards

Indirect dischargers in the MP&M

Phase I category, like the direct

dischargers, use raw materials that

contain many priority pollutant and

nonconventional metal pollutants. As in

the case of direct dischargers, they may

be expected to discharge many of these

pollutants to POTWs at significant mass

or concentration levels, or both. EPA

estimates that indirect dischargers

annually discharge approximately 12

million pounds of priority and

nonconventional metals, and 2.4 million

pounds of priority and nonconventional

organic pollutants.

EPA determines which pollutants to

regulate in PSES on the basis of whether

or not they pass through, interfere with,

or are incompatible with the operation

of POTWs (including interference with

sludge practices). The Agency evaluates

pollutant pass through by comparing the

pollutant percentage removed by well

operated POTWs achieving secondary

treatment with the percentage removed

by BAT technology applied by direct

dischargers. A pollutant is deemed to

pass through POTWs when the average

percentage removed nationwide by

well-operated POTWs (those meeting

secondary treatment requirement) is less

than the percentage removed by directly

discharging MP&M sites applying BAT

for that pollutant.

To evaluate the need for PSES, EPA

followed the procedures established by

the Organic Chemicals, Plastics and

Synthetic Fibers (OCPSF) regulation to

determine the degree to which welloperated POTWs are capable of

removing pollutants. Prior to

promulgation of the OCPSF effluent

guidelines, EPA conducted a study of
28230 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

well-operated POTWs that use

secondary (biological) treatment (the

‘‘50–POTW Study’’). The 50–POTW

study determined the extent to which

priority pollutants are removed by

POTWs. The principal means by which

the Agency evaluated pollutant passthrough was to compare the pollutant

percentage removed by POTWs with the

percentage removed to comply with

BAT limitations.

Because some of the data collected for

evaluating POTW removals included

influent levels of priority pollutants that

were close to the detection limit, the

POTW data were edited to eliminate

influent values less than 10 times the

nominal method detection limit (MDL)

and the corresponding effluent values,

except in cases where none of the

influent concentrations exceeded 10

times the MDL. In the latter case, where

there were no influent data exceeding

10 times the MDL, the data were edited

to eliminate influent values less than

twice the MDL and the corresponding

effluent values. These editing rules were

used to allow for the possibility that low

POTW removals simply reflected the

low influent levels.

EPA then averaged the remaining

influent data and also averaged the

remaining effluent data for the POTWs.

The percent removal achieved for each

priority pollutant was determined from

these averaged influent and effluent

levels. This percent removal was then

compared to the percent removal

achieved by BAT treatment technology.

Based on this analysis, EPA determined

that four nonconventional organic

pollutants, seven priority metal

pollutants, five nonconventional metal

pollutants, cyanide, and chemical

oxygen demand pass through POTWs.

POTW removals for ten of the

nonconventional organic pollutants

were calculated using a data base

developed by EPA’s Risk Reduction

Engineering Laboratory (RREL) and data

transferred from other pollutants based

on physical similarities (e.g., straightchained hydrocarbons, ketones, etc.).

B. PSES Technology Options and

Selection

Indirect discharging MP&M sites

generate waste waters with similar

pollutant characteristics to direct

discharging facilities. Hence, the same

treatment technologies discussed

previously for BPT and BAT are

considered applicable to PSES.

However, as described below, the

application of the technology options

has resulted in the addition of a new

option that applies to indirect

dischargers.

EPA is today proposing PSES for all

parameters listed in Table 2 except TSS

and pH. EPA is proposing PSES for oil

and grease as an indicator for

monitoring for organic pollutants which

have the potential to be present.

The Agency considered the following

five options in developing PSES for

MP&M Phase I.

1. Option 1: Lime and Settle

Treatment. This option is equivalent to

BPT Option 1.

2. Option 1a: Tiered PSES for ‘‘Low’’

Flow and ‘‘Large’’ Flow Sites. This

option would establish a tiered PSES

requirement depending on the annual

discharge volume at a given MP&M site.

For ‘‘low’’ flow sites, sites with a

discharge volume of less than 1,000,000

gallons per year (gpy), PSES would

require that sites comply with

concentration standards based on

Option 1. For a site operating 250 days

per year, 1,000,000 gallons per year

translates into an average discharge flow

rate of 4,000 gallons per day. For ‘‘large’’

flow sites, sites with a discharge volume

of 1,000,000 gpy or greater, PSES would

require that mass-based standards be

imposed based on Option 2 (i.e. the

conversion of Option 1 concentrationbased standards using an appropriate

flow which reflects good pollution

prevention and water conservation

practices such as those included in BPT

Option 2). The flow basis would be

determined by the Control Authority

using site-specific factors and flow

guidance (see the Technical

Development Document for a detailed

presentation of flow guidance aimed at

water conservation and good

housekeeping practices). If mass-based

limitations have not been developed as

required, the source would have to

achieve discharges not exceeding the

concentration limitations listed in the

regulation. The technology basis for

PSES for large flow sites is the same as

BPT Option 2.

3. Option 2a: In-process Flow

Reduction and Pollution Prevention and

Lime and Settle Treatment for ‘‘Large’’

Flow sites. This option would require

that mass-based standards be imposed

based on Option 2 for sites with a

discharge volume of 1,000,000 gpy or

greater. Sites with a discharge volume of

less than 1,000,000 gpy would not be

subject to PSES requirements. For a site

operating 250 days per year, 1,000,000

gallons per year translates into an

average discharge flow rate of 4,000

gallons per day.

In order to fully implement the massbased permits, it is important for

Control Authorities to issue permits in

a timely manner. Dischargers are

reminded of their responsibilities under

the General Pretreatment Regulations

(40 CFR 403) to provide, among other

things, Baseline Monitoring Reports.

The Agency expects Control Authorities

to place a priority on issuing needed

mass-based permits, and those permits

should be issued within a year after the

Baseline Monitoring Report deadline.

Control Authorities that do not meet

these permitting timelines may not be in

compliance with their pretreatment

programs under 40 CFR 123.45.

4. Option 2: In-Process Flow

Reduction & Pollution Prevention and

Lime and Settle Treatment. This option

is equivalent to BPT Option 2.

5. Option 3: Advanced End-of-Pipe

Treatment. This option is equivalent to

BPT Option 3.

Selected Option: EPA is proposing

Option 2a technologies as the basis for

the proposed PSES for MP&M Phase I.

Option 2a is economically achievable

(see Section XIV) and greatly reduces

pollutants discharged into the

environment. Compared to Option 2,

which would require that all MP&M

indirect dischargers be controlled by

mass standards, Option 2a achieves

significant pollutant reduction without

imposing undue administrative burden

on the Control Authorities. Whereas

Option 2 would require an estimated

8,706 facilities to have permits or

similar control mechanisms written

incorporating the proposed standards

into a mass-based permit, Option 2a

reduces this burden, requiring only an

estimated 1,998 facilities to have massbased permits, the rest of the facilities

would not be subject to PSES

requirements. EPA believes this

approach would allow Control

Authorities to focus their efforts on the

facilities discharging the vast majority of

the pollutants, rather than dissipating

their limited resources on sites

contributing much less to the overall

problem. An indication of relative

pollutant loadings by size of facility is

provided in Table 26 below. The low

flow sites could also be expected to

reduce their discharges of pollutants,

but they would do so by meeting local

limits. EPA has consulted with

representatives from EPA Regions,

States and Municipalities, the majority

of whom favor this approach to

regulating the MP&M industry.

C. Calculation of PSES

The proposed pretreatment standards

for existing sources in the MP&M Phase

I category are presented in today’s

proposed rule. The pretreatment

standards are shown for cyanide and

priority and nonconventional metal

pollutants.
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28231

An oil and grease standard is

proposed as an indicator for specific

organic pollutants. The specific organic

pollutants for which oil and grease is an

indicator are 2-methylnaphthalene, 2-

propanone, N-octadecane, and Ntetradecane. EPA identified these

pollutants in MP&M waste water and

determined that these pollutants will

pass through a POTW. These pollutants

are more likely to partition to the oily

phase than the water phase, thus EPA

believes that the treatment and removal

of oil and grease in waste water will also

result in significant removals of these

pollutants. EPA’s sampling results show

higher percent removals are achieved

through oil and grease treatment (BAT

technology) than at a well-operated

secondary POTW. EPA considered and

rejected establishing a pretreatment

standard for Total Toxic Organics (TTO)

which would reflect the sum of

concentrations achieved for several

organic pollutants. The reason EPA

rejected TTO as an approach to

controlling organic pollutant discharges

is that EPA knows that the industry is

in the midst of a significant shift in the

solvents it is using. Accordingly, EPA

has no reason to believe that regulation

of the specific list of organics identified

as of today would reflect the organics

that will be present in waste water when

this regulation is promulgated. EPA is

planning to continue to study the

sources and concentrations of organic

pollutants in MP&M waste water,

particularly as sites switch from ozonedepleting solvents to aqueous-based

cleaners. Accordingly, EPA may

propose a different approach to

controlling organic pollutant discharges

for both Phase I and Phase II in

conjunction with the MP&M Phase II

rulemaking.

As with BAT proposed standards, the

pretreatment standards are expressed in

terms of concentration-based standards.

As described above, EPA is proposing

that MP&M sites be required to comply

with a mass-based permit if their annual

discharge volume equals or exceeds

1,000,000 gallons. The proposed PSES

would require dischargers to meet

‘‘maximum for any one day’’ and

‘‘maximum monthly average’’ standards.

The proposed PSES limitations for

cyanide, priority and nonconventional

metal pollutants, and oil and grease are

identical to those limits established for

these pollutants under proposed BAT

Option 2.

Considering the large number of

indirect dischargers which have the

potential to be covered by this proposed

regulation, an important issue to the

affected industry and to permit writers

is the potentially enormous

administrative burden. Therefore, in

developing this proposal, EPA has

looked for means of reducing the

administrative burden, reducing

monitoring requirements, and reducing

reporting requirements. The proposed

exemption of existing indirect

discharges discharging less than one

million gallons per year is one means by

which EPA is proposing to reduce the

administrative burden.

D. Applicability of PSES Limitations

The Agency is proposing PSES under

the MP&M Phase I category to apply to

all MP&M process waste waters that are

generated by sites performing

manufacturing, rebuilding, or

maintenance of metal parts, products, or

machinery in one of the seven industrial

sectors (i.e., aerospace, aircraft,

electronic equipment, hardware, mobile

industrial equipment, ordnance and

stationary industrial equipment). The

Combined Wastestream Formula will

apply to sites which have operations

covered by MP&M Phase I, existing

effluent guidelines, or not covered by

existing regulations.

E. Removal Credits

As described previously, many

industrial facilities discharge large

quantities of pollutants to POTWs

where their wastes mix with waste

water from other sources, domestic

wastes from private residences and runoff from various sources prior to

treatment and discharge by the POTW.

Industrial discharges frequently contain

pollutants that are generally not

removed as effectively by waste water

treatment at the POTWs as by the

industries themselves.

The introduction of pollutants to a

POTW from industrial discharges poses

several problems. These include

potential interference with the POTW’s

operation or pass-through of pollutants

if inadequately treated. As discussed,

Congress, in section 307(b) of the Act,

directed EPA to establish pretreatment

standards to prevent these potential

problems. Congress also recognized that,

in certain instances, POTWs could

provide some or all of the treatment of

an industrial user’s wastestream that

would be required pursuant to the

pretreatment standard. Consequently,

Congress established a discretionary

program for POTWs to grant ‘‘removal

credits’’ to their indirect dischargers.

The credit, in the form of a less stringent

pretreatment standard, allows an

increased amount of pollutants to flow

from the indirect discharger’s facility to

the POTW.

Section 307(b) of the CWA establishes

a three-part test for obtaining removal

credit authority for a given pollutant.

Removal credits may be authorized only

if (1) The POTW ‘‘removes all or any

part of such toxic pollutant,’’ (2) the

POTW’s ultimate discharge would ‘‘not

violate that effluent limitation, or

standard which would be applicable to

that toxic pollutant if it were

discharged’’ directly rather than through

a POTW and (3) the POTW’s discharge

would ‘‘not prevent sludge use and

disposal by such [POTW] in accordance

with section [405]. * * *’’ Section

307(b).

EPA has promulgated removal credit

regulations in 40 CFR part 403.7. The

United States Court of Appeals for the

Third Circuit has interpreted the statute

to require EPA to promulgate

comprehensive sewage sludge

regulations before any removal credits

could be authorized. NRDC v. EPA, 790

F.2d 289, 292 (3rd Cir. 1986) cert.

denied. 479 U.S. 1084 (1987). Congress

made this explicit in the Water Quality

Act of 1987 which provided that EPA

could not authorize any removal credits

until it issued the sewage sludge use

and disposal regulations required by

section 405(d)(2)(a)(ii).

Section 405 of the CWA requires EPA

to promulgate regulations which

establish standards for sewage sludge

when used or disposed for various

purposes. These standards must include

sewage sludge management standards as

well as numerical limits for pollutants

which may be present in sewage sludge

in concentrations which may adversely

affect public health and the

environment. Section 405 requires EPA

to develop these standards in two

phases. On February 19, 1993, EPA

promulgated the Round One sewage

sludge regulations establishing

standards, including numerical

pollutant limits, for the use and disposal

of sewage sludge. 58 FR 9248. EPA

established pollutant limits for ten

metals when sewage sludge is applied to

land, for three metals when it is

disposed of at surface disposal sites and

for seven metals and total hydrocarbons,

a surrogate for organic pollutant

emissions, when sewage sludge is

incinerated. These requirements are

codified at 40 CFR part 503.

The Phase One regulations partially

fulfilled the Agency’s commitment

under the terms of a consent decree that

settled a citizens suit to compel

issuance of the sludge regulations.

Gearhart, et al. v. Reilly, Civil No. 89–

6266–JO (D.Ore). Under the terms of

that decree, EPA must propose and take

final action on Round Two sewage

sludge regulations by December 15,

2001.
28232 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

1Under Section 403.7, a POTW is authorized to

give removal credits only under certain conditions.

These include applying for, and obtaining, approval

from the Regional Administrator (or Director of a

State NPDES program with an approved

pretreatment program), a showing of consistent

pollutant removal and an approved pretreatment

program. See 40 CFR 403.7(a)(3) (i), (ii), and (iii).

2 In the Round One sewage sludge regulation,

EPA concluded, on the basis of risk assessments,

that certain pollutants (see Appendix G to Part 403)

did not pose an unreasonable risk to human health

and the environment and did not require the

establishment of sewage sludge pollutant limits. As

discussed above, so long as the concentration of

these pollutant in sewage sludge are lower than a

prescribed level, removal credits are authorized for

such pollutants.

At the same time EPA promulgated

the Round One regulations, EPA also

amended its pretreatment regulations to

provide that removal credits would be

available for certain pollutants regulated

in the sewage sludge regulations. See 58

FR at 9386. The amendments to part 403

provide that removal credits may be

made potentially available for the

following pollutants:

(1) If a POTW applies its sewage

sludge to the land for beneficial uses,

disposes of it on surface disposal sites

or incinerates it, removal credits may be

available, depending on which use or

disposal method is selected (so long as

the POTW complies with the

requirements in part 503). When sewage

sludge is applied to land, removal

credits may be available for ten metals.

When sewage sludge is disposed of on

a surface disposal site, removal credits

may be available for three metals. When

the sewage sludge is incinerated,

removal credits may be available for

seven metals and for 57 organic

pollutants. See 40 CFR

403.7(a)(3)(iv)(A).

(2) In addition, when sewage sludge is

used on land or disposed of on a surface

disposal site or incinerated, removal

credits may also be available for

additional pollutants so long as the

concentration of the pollutant in sludge

does not exceed a concentration level

established in part 403. When sewage

sludge is applied to land, removal

credits may be available for two

additional metals and 14 organic

pollutants. When the sewage sludge is

disposed of on a surface disposal site,

removal credits may be available for

seven additional metals and 13 organic

pollutants. When the sewage sludge is

incinerated, removal credits may be

available for three other metals. See 40

CFR 403.7(a)(3)(iv)(B).

(3) When a POTW disposes of its

sewage sludge in a municipal solid

waste landfill that meets the criteria of

40 CFR part 258 (MSWLF), removal

credits may be available for any

pollutant in sewage sludge. See 40 CFR

403.7(a)(3)(iv)(C).

Thus, given compliance with the

requirements of EPA’s removal credit

regulations,1 following promulgation of

the pretreatment standards being

proposed here, removal credits may be

authorized for any pollutant subject to

pretreatment standards if the applying

POTW disposes of its sewage sludge in

a MSWLF that meets the requirements

of 40 CFR part 258. If the POTW uses

or disposes of its sewage sludge by land

application, surface disposal or

incineration, removal credits may be

available for the following metal

pollutants (depending on the method of

use or disposal): arsenic, cadmium,

chromium, copper, iron, lead, mercury,

molybdenum, nickel and zinc. Given

compliance with section 403.7, removal

credits may be available for the

following organic pollutants (depending

on the method of use or disposal) if the

POTW uses or disposes of its sewage

sludge: benzene, 1,1-dichloroethane,

1,2-dibromoethane, ethylbenzene,

methylene chloride, toluene,

tetrachloroethene, 1,1,1-trichloroethane,

1,1,2-trichloroethane and trans-1,2-

dichloroethene.

Some facilities may be interested in

obtaining removal credit authorization

for other pollutants being considered for

regulation in this rulemaking for which

removal credit authorization would not

otherwise be available under part 403.

As discussed in the sewage sludge

regulations (58 FR 9382–83), EPA has

concluded that removal credits should

not be authorized for pollutants other

than the pollutants specifically

regulated by the final part 503

regulation. The Agency has determined

that the CWA, as amended, removal

credit eligibility is limited to those

pollutants regulated specifically in Part

503 and to pollutants that the Agency

determines do not threaten human

health and the environment when used

or disposed of in sewage sludge. When

read together, sections 307(b) and 405

permit removal credits only when it can

be determined that the increased

concentrations or amounts allowed by

the removal credit will not affect sewage

sludge use or disposal adversely. EPA

determined that a categorical

pretreatment standard pollutant is

eligible for removal credits only when

EPA has either established a specific

numerical limit for that pollutant or has

evaluated it and concluded that it does

not threaten public health or the

environment. 58 FR 9382–83.

Consequently, in the case of a

pollutant for which EPA did not

perform a risk analysis in developing

the Phase One sewage sludge

regulations, removal credit for

pollutants will only be available when

the Agency determines either a safe

level for the pollutant in sewage sludge

or that regulation of the pollutant is

unnecessary to protect public health

and the environment from the

reasonably anticipated adverse effects of

such a pollutant.2 Therefore, any person

seeking to add additional categorical

pollutants to the list for which removal

credits are now available would need to

submit information to the Agency to

support such a determination. The basis

for such a determination may include

information showing the absence of

risks for the pollutant (generally

established through an environmental

pathway risk assessment such as EPA

used for Phase One) or data establishing

the pollutant’s presence in sewage

sludge at low levels relative to risk

levels or both. Parties, however, may

submit whatever information they

conclude is sufficient to establish either

the absence of any potential for harm

from the presence of the pollutant in

sewage sludge or data demonstrating a

‘‘safe’’ level for the pollutant in sludge.

Following submission of such a

demonstration, EPA will review the data

and determine whether or not it should

propose to amend the list of pollutants

for which removal credits would be

available.

EPA has already begun the process of

evaluating a number of pollutants for

adverse potential to human health and

the environment when present in

sewage sludge. In May, 1993, pursuant

to the terms of the consent decree in the

Gearhart case, the Agency notified the

United States District Court for the

District of Oregon that, based on the

information then available at that time,

it intended to propose 31 pollutants for

regulation in Round Two sewage sludge

regulations. These are acetic acid (2, 4,

-dichlorophenoxy), aluminum,

antimony, asbestos, barium, beryllium,

boron, butanone (2-), carbon disulfide,

cresol (p-), cyanides (soluble salts and

complexes), dioxins/dibenzofurans (all

monochloro to octochloro congeners),

endsulfan-II, fluoride, manganese,

methylene chloride, nitrate, nitrite,

pentachloronitrobenzene, phenol,

phthalate (bis-2-ethylhexyl),

polychlorinated biphenyls (co-planar),

propanone (2-), silver, thallium, tin,

titanium, toluene,

trichlorophenoxyacetic acid (2, 4, 5-),

trichlorphenoxypropionic acid ([2- (2, 4,

5-)], and vanadium.

The Round Two regulations are not

scheduled for proposal until December,

1999 and promulgation in December

2001. However, given the necessary
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28233

factual showing, as detailed above, EPA

could conclude before the contemplated

proposal and promulgation dates that

regulation of some of these pollutants is

not necessary. In those circumstances,

EPA could propose that removal credits

should be authorized for such pollutants

before promulgation of the Round Two

sewage sludge regulations. However,

because of the Agency’s commitment to

promulgation of effluent limitations and

guidelines under the consent decree

with NRDC, it may not be possible to

complete review of removal credit

authorization requests by the time EPA

must promulgate these guidelines and

standards.

EPA’s proposal to establish

pretreatment standards for oil and

grease as an indicator for organic

pollutants means that oil and grease is

not subject to removal credits.

F. Compliance Date

EPA is proposing to establish a threeyear deadline for compliance with

PSES. Design and construction of

systems adequate for compliance with

PSES will be a substantial undertaking

for many MP&M sites. In addition,

Control Authorities will need the time

to develop the mass-permits for their

industrial users with annual discharge

volumes greater than 1,000,000 gallons.

G. PSES Pollutant Removals, Costs and

Economic Impacts

EPA estimates that the proposed PSES

regulation will result in the removal of

14 million pounds per year of pollutants

including 9.1 million pounds of priority

and nonconventional metal pollutants

and 2.1 million pounds of priority and

nonconventional organic pollutants and

cyanide. PSES is estimated to result in

capital costs of approximately $ 351

million and annualized costs of $ 142

million (in 1994 dollars). EPA projects

that 7 sites may be closed as a result of

PSES, and job losses will affect 540 fulltime employees (FTEs). However, EPA

estimates that compliance activities may

generate annual labor requirements

which could more than offset these job

losses.

XIII. New Source Performance

Standards (NSPS) and Pretreatment

Standards for New Sources (PSNS)

Section 307(c) of the Act calls for EPA

to promulgate pretreatment standards

for new sources (PSNS) at the same time

that it promulgates new source

performance standards (NSPS). New

facilities have the opportunity to

incorporate the best available

demonstrated technologies including

process changes, in-plant controls, and

end-of-pipe treatment technologies.

The same technologies discussed

previously for BAT and PSES are

available as the basis for NSPS and

PSNS. Option 2 was the selected option

for BAT and for large flow PSES, and

the only higher technology option

identified by EPA was Option 3. Option

3 includes advanced end-of-pipe

treatment with significant reuse of

process water. Since new sites have the

potential to install pollution prevention

and pollution control technologies more

cost effectively then existing sources,

Option 3 was considered for NSPS and

PSNS. However, EPA did not select

Option 3 technology as the basis for

NSPS and PSNS because the costs do

not justify the removals achieved.

Therefore, EPA is proposing NSPS and

PSNS for MP&M Phase I are based on

the proposed Option 2 BAT

technologies identified above. All NSPS

and PSNS limits are expected to be

mass-based. If mass-based limitations

have not been developed as required,

the source shall achieve discharges not

exceeding the concentration limitations

listed in the regulation.

XIV. Economic Considerations

A. Introduction

EPA’s economic impact assessment is

set forth in the report titled ‘‘Economic

Impact Analysis Of Proposed Effluent

Limitations Guidelines And Standards

For The Metal Products And Machinery

Industry, Phase I’’ (hereinafter ‘‘EIA’’).

This report estimates the expected

economic effect of compliance with the

proposed regulatory options in terms of

facility closures and associated losses in

employment. Firm-level impacts, local

community impacts, international trade

effects, labor requirements of

compliance, and effects on new Metal

Products and Machinery Industry

(MP&M) facilities are also presented in

this report. A Regulatory Flexibility

Analysis detailing the small business

impacts for this industry is also

included in the EIA. In addition, EPA

conducted an analysis of the costeffectiveness of the regulatory options.

The report, ‘‘Cost-Effectiveness Analysis

of Proposed Effluent Limitations

Guidelines and Standards of

Performance for the Metal Products and

Machinery Industry, Phase I’’ is

included in the record of this rulemaking. EPA also prepared a

background analysis of the economic

conditions in the MP&M industry,

‘‘Industry Profile Of the Metal Products

and Machinery Industry, Phase I.’’ The

following discussion summarizes

material from the Economic Impact

Analysis, Cost-Effectiveness Analysis,

and Industry Profile reports. The reader

is referred to these reports for the full

details of these analyses.

Analysis of the economic impacts of

effluent guidelines for the MP&M

industry relies heavily on the responses

to the questionnaire distributed to

MP&M facilities by EPA under the

authority of Section 308 of the Clean

Water Act (the DCP). As discussed

above, EPA sent the questionnaire,

requesting both technical and economic

information, to 1,020 MP&M industry

facilities (See Section V.A.2 for details).

After detailed data cleaning and

validation activities, the responses for

396 facilities, representing 10,601 waterdischarging facilities in the MP&M

industry population, were used in the

industry impact analysis. EPA analyzed

the economic impacts of the regulatory

options applicable to MP&M Phase I

facilities on the basis of data for the 396

sample facilities. The impacts assessed

for these sample facilities were

extrapolated to the level of the MP&M

industry population using facility

sample weights that are based on the

sample design for the Section 308

survey. Unless otherwise indicated, the

remainder of this discussion reports the

estimated economic impacts for the

MP&M industry population.

B. Overview of the Facilities Potentially

Subject to Regulation

From secondary source data

(Department of Commerce), EPA

estimates that approximately 90,000

establishments or facilities participated

in the MP&M Phase I business sectors as

of 1987. Thus, the estimated 10,601

water-discharging facilities (from

Section 308 Survey data) that would

potentially be affected by this regulation

represent about 11 percent of the total

facilities in the MP&M Phase I business

sectors. Of the 10,601 water-discharging

facilities, EPA estimates that 8,706

facilities are indirect dischargers (i.e.,

they discharge effluent to a POTW) and

would thus be subject to Pretreatment

Standards for Existing Sources (PSES).

The remaining 1,895 facilities are

estimated to be direct dischargers (i.e.,

they discharge effluent directly to a

waterway under a NPDES permit) and

will thus be subject to Best Available

Technology Economically Achievable

(BAT) and Best Practicable Control

Technology Currently Available (BPT)

requirements as herein proposed.

The MP&M facilities that are expected

to be subject to this regulation

contribute significantly to the U.S.

economy. Table 3, below, summarizes

important economic data for the

estimated 10,601 water-discharging

facilities that are potentially subject to

regulation and on which the economic
28234 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

3Although the MP&M Phase I sectors include

non-manufacturing activities and employment,

nearly 95 percent of the revenue received by

facilities affected by the regulation is estimated to

be derived from manufacturing activities. Thus, the

comparison of employment and other economic

values with totals for the U.S. manufacturing sector

provides a relevant basis for understanding the

economic significance of the industries and

facilities expected to incur costs under the

regulation.

4 Value Added is the difference between the

output price of a good or service and the price of

all material inputs used in producing the good or

service, and is generally considered a better

measure than revenue of the value of production

that occurs in a given economic activity.

impact analysis for this regulation is

based.

TABLE 3.—SUMMARY DATA FOR 1989 FOR FACILITIES SUBJECT TO REGULATION IN MP&M PHASE I SECTORS ESTIMATED

REVENUE, VALUE ADDED AND PAYROLL IN MILLIONS OF 1989 DOLLARS

Sector Facilities Employment Revenue Value added Payroll

Hardware .............................................................................. 4,197 379,000 44,327 9,463 5,845

Aircraft .................................................................................. 856 552,000 96,715 24,858 15,148

Electronic Equipment ............................................................ 1,280 700,000 155,101 80,502 12,503

Stationary Industrial Equipment ........................................... 2,769 419,000 52,918 12,815 6,306

Ordnance .............................................................................. 190 131,000 21,666 7,059 4,006

Aerospace ............................................................................. 545 580,000 54,430 19,454 9,660

Mobile Industrial Equipment ................................................. 764 275,000 65,914 14,101 8,151

All Phase I Sectors ........................................................ 10,601 3,036,000 491,071 168,252 61,620

Total U.S. Manufacturing .............................................. ....................... 19,492,000 2,793,000 1,308,000 533,000

Phase I Facilities as a Percent of Total U.S. Manufacturing ....................... 15.58% 17.58% 12.86% 11.56%

Source: U.S. Environmental Protection Agency, Section 308 Survey Data, 1989, and Statistical Abstract of the United States, 1992, Department of Commerce.

These data show that the 10,601

facilities potentially subject to

regulation employed over 3,000,000

persons in 1989 or approximately 16

percent of the total U.S. manufacturing

employment of 19.5 million in 1989.3

Total revenues for the 10,601 facilities

are estimated at $491 billion or about 18

percent of the total shipments for U.S.

manufacturing in 1989 of $2,793 billion.

A more meaningful measure of the value

of production activity in these facilities

is provided by value added,4 which is

estimated to amount to about $168

billion or approximately 13 percent of

the total value added of $1,308 billion

for U.S. manufacturing in 1989. The

estimated payroll for the 10,601

facilities is about $62 billion or

approximately 12 percent of the total of

$533 billion for U.S. manufacturing in

1989.

Table 3 also shows these economic

activity data for the seven MP&M Phase

I business sectors. On the basis of

number of facilities, the Hardware,

Stationary Industrial Equipment, and

Electronic Equipment sectors are the

largest sectors subject to regulation.

These three sectors account for over 75

percent of the total of 10,601 facilities

expected to be subject to regulation.

However, on the basis of employment

and dollar measures of economic

activity, the Hardware sector is less

dominant. A ranking on both

employment and value added shows

that Electronic Equipment is the largest

sector in terms of economic contribution

followed by Aircraft, Aerospace,

Stationary Industrial Equipment, Mobile

Industrial Equipment, Hardware, and

Ordnance.

C. Overview of Options Considered for

Proposal and Selection of the Proposed

Options

In developing the regulatory

proposals presented herein, EPA

defined and evaluated a number of

PSES regulatory options for indirect

dischargers and BAT/BPT options for

direct dischargers. The following

discussion defines the options that were

considered for proposal and outlines the

rationale for the regulatory proposals.

1. PSES Options for Indirect Dischargers

As discussed previously in Sections

IX, XI, and XII, EPA initially evaluated

three PSES regulatory options for

indirect dischargers:

Option 1: Lime and Settle Treatment.

Under this option, Pretreatment

Standards for Existing Sources (PSES)

would be established on the basis of the

application of lime and settle treatment

without any pollution prevention and

flow controls imposed. The

implementation of this option would

likely result in concentration-based

standards imposed on facilities by

Control Authorities.

Option 2: In-Process Flow Reduction

and Pollution Prevention and Lime and

Settle Treatment. This option would

establish PSES on the basis that all

facilities should comply with massbased standards that are the based on

the Lime and Settle technology and

associated concentration limits as

specified for Option 1. However, the

mass-based standards would be

calculated from a flow volume that

reflects good pollution prevention and

water conservation practices. Thus, this

option embodies a requirement for

pollution prevention and water

conservation in conjunction with the

Lime and Settle Treatment process. The

flow basis would be determined by the

relevant Control Authority using sitespecific factors and flow guidance.

Option 3: Advanced End-of-Pipe

Treatment. This option would establish

PSES based on the same technology and

mass-based limit specifications as set

forth for in Option 2 plus additional

end-of-pipe treatment through reverse

osmosis or ion exchange to achieve

additional removals and produce a

treated wastewater that can be recycled

back to the facility for reuse as process

waters.

From its preliminary analysis of these

options, EPA initially selected Option 2,

In-Process Flow Reduction and

Pollution Prevention and Lime and

Settle Treatment, as the preferred PSES

regulatory option for indirect

dischargers. Stated simply, EPA

preferred Option 2 because it would

apply to all indirect discharging

facilities, mass-based standards that

embody best available technology based

on a combination of treatment systems

and pollution prevention measures.

Moreover, EPA found that Option 2

would impose relatively modest

economic impacts in terms of expected

facility closures and employment losses

in the MP&M industry and thus

concluded that Option 2 would be
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28235

economically achievable. However,

upon further analysis and consideration,

EPA reached additional findings that

weighed against the proposal of Option

2 and caused the Agency to define and

evaluate modifications to Option 2 as

the basis for a PSES proposal. These

findings involved three issues as

follows:

Impact on small business. In its

Regulatory Flexibility Analysis, EPA

found that Option 2 would be expected

to disproportionately burden small

business-owned facilities in terms of

facility closures and financial

requirements. In particular, by

embodying technology requirements for

pollution prevention as well as

treatment systems, Option 2 was found

to impose greater financial burden on

MP&M small business-owned, indirect

discharging facilities than would result

from the treatment system-only basis of

Option 1. As discussed in Section K.,

Regulatory Flexibility Analysis, below,

EPA considered modifications to Option

2 in an effort to mitigate financial and

economic burdens on small businessowned facilities. These modifications

differentiated among facilities based on

the annual volume of facility discharge;

however, EPA anticipated that reducing

regulatory requirements for small

discharge volume facilities would also

mitigate the regulatory burden among

small business entities.

Cost effectiveness. For indirect

discharging facilities with smaller

discharge volumes, EPA found that

Option 2 would not be cost effective

(see Section L, below). That is, for

facilities with smaller discharge

volumes, Option 2 would not achieve

sufficient additional reductions in

pollutant discharges beyond those

achieved by Option 1 to support its

higher cost relative to Option 1. In view

of this finding, EPA considered

modifications to Option 2 that would be

more cost effective for indirect

discharging facilities with smaller

discharge volumes.

Impact on permitting authorities. EPA

was concerned that Option 2, by

requiring mass-based permits for all

indirect discharging facilities, regardless

of discharge volume, would

substantially burden the authorities that

administer the permit requirements. In

particular, as part of the public

participation in the regulation

development process, the Association of

Metropolitan Sewerage Agencies

(AMSA) commented that the permit

administration requirements of covering

small discharge facilities under massbased limitations would unduly burden

permitting authorities. In its analysis of

the MP&M Phase I industry, EPA

estimated that a large percentage of

indirect discharging facilities had

relatively small annual discharge: over

75 percent of the estimated 6,700

indirect discharging facilities discharge

less than 1 million gallons annually.

Thus, EPA acknowledged that Option 2

would require a large number of permits

to be written for these smaller discharge

volume facilities and could therefore

impose a substantial burden on

permitting authorities. In response to

this concern, EPA undertook a limited

analysis of the likely costs to permitting

authorities of issuing mass-based and

concentration-based permits. This

analysis indicated that the cost to

permitting authorities of covering

smaller discharge volume facilities (less

than 1 million gallons per year) could

vary considerably among permitting

authorities but, in aggregate, might not

be excessive: EPA estimated a total

annual cost of $1.9 to $3.2 million

($1994) for writing and administering

permits for indirect discharging

facilities with effluent discharge of less

than 1 million gallons per year. Still, in

view of the limited nature of EPA’s

analysis of permitting costs and,

moreover, in view of the findings with

regard to small business impact and cost

effectiveness (which also argued for

moderating requirements among smaller

facilities), EPA decided to define and

evaluate modifications to Option 2 that

would reduce the number of mass-based

permits needed for implementing the

regulation. Because of the conflicting

information and findings regarding the

burden of permit administration, EPA

requests that permitting authorities

comment on this issue.

On the basis of these findings, EPA

defined and evaluated two additional

PSES regulatory options for indirect

discharging facilities: Option 1a and

Option 2a. EPA found that both options

addressed the issues described above

and presented superior alternatives to

Options 1, 2, or 3, alone, for regulatory

proposal. However, with respect to each

of the issues noted above—impact on

small business, cost effectiveness, and

burden on permit writing authorities—

EPA found that Option 2a provided a

better solution than Option 1a.

Accordingly, EPA is proposing Option

2a as the preferred PSES option for

indirect discharging facilities. Option 1a

and Option 2a, together with the basis

of their selection for regulatory

proposal, are discussed below:

Option 1a: Tiered PSES for ‘‘Low’’

Flow and ‘‘Large’’ Flow Sites. This

option would establish a tiered PSES

requirement and blends elements of

Option 1 and Option 2 depending on a

site’s annual discharge volume. Sites

with a discharge volume of less than

1,000,000 gallons per year (‘‘low’’ flow

sites) would meet the concentrationbased standard set forth in Option 1.

Sites with a discharge volume of at least

1,000,000 gallons per year (‘‘large’’ flow

sites) would meet the mass-based

standards that embody pollution

prevention as well as the Lime and

Settle Treatment process as set forth in

Option 2.

By adopting the concentration-based

requirements of Option 1 for ‘‘low’’ flow

sites, Option 1a reduces the number of

facilities for which mass-based permits

would need to be written. In addition,

Option 1a reduces the expected

compliance costs and financial burdens

for the smaller discharge volume

facilities, many of which are small

businesses. Finally, because of the

reduced requirements on smaller

discharge volume facilities, Option 1a

achieves better cost effectiveness than

Option 2.

Option 2a: In-Process Flow Reduction

and Pollution Prevention and Lime and

Settle Treatment for ‘‘Large’’ Flow Sites.

This option would establish the same

PSES requirements as specified for

Option 2. However, these requirements

would apply to only ‘‘large’’ flow sites—

that is, indirect discharge sites with a

discharge volume of at least 1,000,000

gallons per year. All such sites would

comply with mass-based standards

based on the Lime and Settle Treatment

process coupled with a requirement for

pollution prevention and water

conservation as specified for Option 2.

‘‘Low’’ flow indirect discharge sites—

that is, with a discharge volume of less

than 1,000,000 gallons per year—would

not be subject to PSES requirements.

EPA estimates that, of the 8,706 indirect

discharge facilities in the MP&M Phase

I industry, 6,708 would qualify as low

flow discharge sites and thus would not

be subject to the Option 2a PSES

requirement.

By exempting low flow discharge sites

from PSES regulatory requirements,

Option 2a, even more than Option 1a,

mitigates the difficulties of Option 2.

Specifically, because of the regulation’s

reduced coverage in terms of number of

facilities, Option 2a would substantially

reduce the burden on permit-writing

authorities. In addition, low flow

indirect discharging facilities would

bear no costs as a result of regulation,

substantially reducing financial burdens

and closure impacts among small

business-owned facilities. Finally, as

discussed below at Section L, EPA

found that Option 2a would be expected

to achieve substantially better cost

effectiveness than the other regulatory
28236 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

options considered for indirect

discharging facilities.

Thus, EPA found that Option 2a

addresses the limitations of Option 2

while imposing even fewer economic

impacts than Option 2 or Option 1a in

terms of facility closures and financial

burdens. Moreover, Option 2a embodies

best available technology for reducing

the industry’s effluent discharges.

Accordingly, EPA judges that Option 2a

presents a balanced regulatory approach

for reducing effluent discharges from

the MP&M Phase I indirect discharging

facilities while not imposing undue

burdens on industry or on the permitwriting authorities that will be directly

responsible for administering the

regulation.

2. BAT/BPT Options for Direct

Dischargers

As discussed previously in Sections

IX, XI, and XII, EPA evaluated three

BAT/BPT regulatory options for direct

discharging facilities:

Option 1: Lime and Settle Treatment.

Under this option, BAT/BPT would be

established on the basis of the

application of lime and settle treatment

without any pollution prevention and

flow controls imposed.

Option 2: In-Process Flow Reduction

and Pollution Prevention and Lime and

Settle Treatment. Option 2 includes the

same technology basis as Option 1, lime

and settle treatment, but adds in-process

pollution prevention and flow controls.

Option 3: Advanced End-of-Pipe

Treatment. Option 3 includes the same

treatment technology and in-process

pollution prevention and flow controls

as set forth in Option 2 plus additional

end-of-pipe treatment through reverse

osmosis or ion exchange to achieve

additional removals and produce a

treated wastewater that can be recycled

back to the facility for reuse as process

waters.

Of these options, EPA selected Option

2 as the proposed BPT/BAT regulation

for direct existing discharging facilities.

Like Option 2a for indirect discharging

facilities, Option 2 embodies best

available technology for reducing

effluent discharges. Moreover, EPA

found that Option 2 would impose

modest economic impacts in terms of

facility closures, employment losses,

and financial requirements. As

discussed in Section L, below, EPA also

found that Option 2 is cost effective.

Finally, EPA concluded that Option 2

(in combination with Option 2a for

indirect dischargers) would impose a

modest and manageable burden among

small business-owned, direct

discharging facilities.

The following sections summarize the

specific analyses and findings leading to

EPA’s selection of Option 2a for indirect

dischargers and Option 2 for direct

dischargers as the proposed regulatory

alternatives for existing facilities in the

MP&M Phase I industries.

D. Economic Impact Methodology

The promulgation of a BAT effluent

guideline rests on a finding of economic

achievability. As described earlier in

Section III of this Preamble, EPA is

proposing to establish BAT equal to

BPT. BPT effluent limitations do not

face the same economic achievability

test as BAT. Therefore, the following

discussion of economic achievability

describes the regulatory approach in

terms of BAT economic achievability.

The analyses supporting the

determination of economic achievability

for this proposed regulation include a

facility impact analysis, which assesses

how facilities are expected to be affected

financially by the proposed regulation.

Key outputs of the facility impact

analysis include expected facility

closures in the MP&M industry and the

associated losses in employment and

value of economic activity in those

facilities. The findings from the facility

impact analysis provide the basis for the

other analyses regarding the economic

achievability of the regulation. These

include:

• A firm-level analysis, which

assesses the impact of effluent

guidelines on the financial performance

and condition of firms owning MP&M

facilities subject to regulation;

• A labor requirements analysis,

which assesses the likely demands for

labor that will accompany the activities

of facilities to comply with effluent

guidelines.

• A community impact analysis,

which assesses the local employment

impact of possible facility closures;

• A foreign trade analysis, which

assesses the effect of effluent guidelines

on the international competitiveness

and balance of trade of the MP&M

industries.

• A new source impact analysis,

which assesses the effect of effluent

guidelines on the costs and financial

viability of new facilities in the MP&M

industries; and

• The Regulatory Flexibility Analysis,

which assesses the economic and

financial impacts of effluent guidelines

for the MP&M industries on small

businesses.

The following section of the preamble

addresses the facility impact analysis.

This discussion is followed by the other

analyses of the economic impact of

effluent guidelines for the MP&M

industries.

1. Structure of the Facility Impact

Analysis

The facility-level impact analysis

involves a series of financial analyses to

assess the expected occurrence of

significant financial impacts as the

result of an MP&M effluent guideline.

Several considerations define the

structure of the facility impact analysis,

including: the impact categories

analyzed; baseline and post-compliance

analyses; assumptions regarding the

ability of facilities to pass compliance

costs on to customers; and whether

facilities were expected to discharge

effluent to a publicly owned treatment

works (POTW) (i.e., indirect

dischargers) or directly to a waterway

(i.e., direct dischargers). Each of these

considerations is discussed briefly

below.

a. Impact Categories Analyzed

Two categories of significant impact

are assessed: (1) facility closure, which

is judged as a severe economic impact,

in that all employment and production

at the facility are assumed to be

terminated; and (2) financial stress short

of closure, which is judged to be a

moderate economic impact. The

estimates of facility closures and

associated employment and production

losses underlie the other analyses

required for the assessment of economic

achievability. The second impact

category, financial stress short of

closure, signifies that facilities may

experience difficulty in financing the

pollution prevention and treatment

systems needed for compliance or that,

because of compliance, may

subsequently experience difficulty in

financing other capital needs.

b. Baseline and Post-Compliance

Analyses

The facility closure analyses were

undertaken on both a pre-compliance,

or baseline, basis, and a postcompliance basis. The purpose of the

Baseline Analysis is to identify facilities

that are currently experiencing or are

projected to experience significant

financial stress following the period for

which the Survey was completed. These

facilities are having or are expected to

have serious financial difficulties

regardless of the promulgation of

effluent guidelines. Attribution of these

financial difficulties to the effluent

guidelines rather than to facilities’

current financial problems would

inaccurately represent the burden of the

effluent guidelines. Accordingly,

facilities that failed the baseline analysis
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28237

5See the Public Record for a detailed listing of

the secondary information sources used in the

economic impact analysis.

were excluded from the subsequent,

post-compliance analyses that measure

the impact of compliance on financial

performance and condition.

The Post-Compliance Analyses differ

from the Baseline Analysis by

accounting for the capital and operating

costs of pollution prevention and

discharge treatment systems needed to

comply with regulatory options. The

post-compliance analyses thus indicate

how facility financial performance and

condition are likely to be affected by the

proposed regulation and provide the

basis for identifying whether facilities

may be expected to incur a significant

financial impact.

c. Pass Through of Compliance Costs to

Customers

The analyses of Post-Compliance

Closure and Financial Stress Short Of

Closure were performed under

assumptions of both zero-cost-passthrough and partial-cost-pass-through of

compliance costs to customers. The

zero-cost-pass-through case provides a

conservative assessment of regulatory

impacts in that facilities are assumed to

pass none of the costs of compliance

through to customers. That is, both

quantities and prices—and therefore

revenues—for each facility’s production

were assumed to remain constant after

compliance even though costs were

increased on the basis of the estimated

equipment and operating requirements

for effluent guidelines compliance.

Because it is likely that companies

would both attempt and be able to

recover some of the compliance costs by

increasing prices, the no-cost-passthrough case represents an extremely

conservative, worst case assessment of

the effects of the regulation.

For a more realistic assessment of

impacts, EPA also analyzed the impact

of regulatory options under an

assumption of partial-cost-pass-through.

For the partial-cost-pass-through

analysis, EPA estimated the ability of

firms in each of the MP&M sectors to

recover compliance costs from

customers. The assessment of cost passthrough potential was based on an

econometric analysis of historical

pricing and cost trends in the MP&M

industries over a fifteen-year period

coupled with an analysis of market

structure factors that provide additional

insight into the likely ability of firms to

pass on higher costs to customers.

Market structure factors considered in

the analysis include: market power

based on horizontal and vertical

integration; extent of competition from

foreign suppliers (both in domestic and

export markets); barriers to competition

as indicated by higher than normal

profitability; and the long term growth

trend in the industry. The analysis of

pass-through potential yielded a passthrough parameter applicable to each

MP&M industry sector indicating the

fraction of compliance costs that firms

subject to regulation are expected to

recover from customers through

increased revenues. The partial-costpass-through analysis yielded modestly

lower impacts in terms of expected

facility closures and losses in

employment and production.

d. Facility Discharge Status

Whether facilities discharge effluent

streams to a publicly owned treatment

works (POTW) (i.e., indirect

dischargers) or directly to a waterway

(i.e., direct dischargers) is relevant to

the structure of the economic impact

analysis because these facilities and

their effluent streams are regulated

under different technology standards.

Indirect dischargers are subject to

Pretreatment Standards for Existing

Sources (PSES) while direct dischargers

are subject to Best Available Technology

Economically Achievable (BAT), Best

Practicable Control Technology

Currently Available (BPT), and Best

Conventional Pollutant Control

Technology (BCT) requirements. For

this regulation, different sets of

regulatory options were considered for

indirect and direct dischargers. As

discussed above, five PSES regulatory

options were considered for indirect

dischargers and three BAT/BPT options

were considered for direct dischargers.

EPA performed the facility impact

analyses separately for these two classes

of facilities and the regulatory options

that were considered for them. In the

following discussion, economic impact

analysis results are presented separately

for the two classes of facilities and are

also summed for the proposed options

for both facility classes.

2. Data Supporting the Facility Impact

Analysis

The most important source of data for

the facility impact analysis is the

facility-level financial data obtained by

the DCP. These data include: three years

(1987–89) of income statements and

balance sheets at the level of the facility;

the composition of revenues by

customer type and MP&M business

sector; estimated value of facility assets

and liabilities in liquidation; borrowing

costs; and ownership of the facility

business and total revenues of the

owning entity (if separate from the

facility).

In addition to the DCP data, several

secondary sources provided data for the

analysis. In most cases, secondary

source data were used to characterize a

background economic or financial

condition, in the economy as a whole or

in the particular industries subject to

the MP&M effluent guideline. For

example, secondary source data were

used to define capital market conditions

underlying the cost-of-capital analysis.

Secondary source data also figured

prominently in the analysis of cost passthrough potential for the MP&M sectors.

Secondary sources used in the analysis

include:5

• Department of Commerce economic

census and survey data including the

Censuses of Manufacturers, Annual

Surveys of Manufacturers, and

international trade data;

• The Benchmark Input-Output

Tables of the United States, published

by the Bureau of Economic Analysis in

the Department of Commerce;

• Price index series from the Bureau

of Labor Statistics, Department of Labor;

• U.S. Industrial Outlook, published

by the Department of Commerce;

• Industry trade publications; and

• Financial publications, including

the Value Line Investment Survey and

Robert Morris Associates annual data

summaries.

Other vital data for the analysis of

facility impacts include the estimates of

capital and operating costs for

complying with regulatory options.

These cost estimates were developed by

EPA from engineering studies of sample

MP&M industry facilities. These studies

took into account the characteristics of

effluent discharges and existing

treatment systems at the facilities and

estimated the additional pollution

prevention and treatment system needs

for complying with the alternative

regulatory options. The estimated

capital costs and annual operating and

maintenance costs for pollution

prevention and treatment systems

provided the basis for assessing how an

effluent guideline would be likely to

affect the financial performance and

condition of MP&M facilities and

whether those facilities might be

expected to incur significant economic

impacts.

3. Methodology for Calculating Facility

Impacts

The estimation of facility impacts is

based on the following analyses: the

Baseline Closure Analysis, the PostCompliance Closure Analysis, and the

Financial Stress Short of Closure

Analysis. Each analysis is described

briefly in the following section. Table 4,
28238 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

below, summarizes the methodology for

each impact category.

a. Baseline Closure Analysis

The Baseline Facility Closure

Analysis is based on two financial tests,

both of which must be failed for the

facility to be deemed a closure:

1. After-Tax Cash Flow Test. This test

examines whether a facility has lost

money on a cash basis for the three

years covered by the DCP. If the

facility’s cash flow is negative when

averaged over the period of analysis,

then the facility’s management and

ownership is presumed to be under

pressure to change operations or

business practices to eliminate future

losses. One possible change is to

terminate operations at the facility.

Whether it may be financially

advantageous to the facility’s ownership

to terminate facility operations is the

subject of the second financial test.

2. Liquidation Value and GoingConcern Value Comparison Test. This

test examines whether the liquidation

value of facility assets exceeds the going

concern value of the facility based on a

discounted value analysis of the

facility’s after-tax cash flow. The

liquidation value of facility assets was

calculated from information provided

by facilities in the DCP and reflects the

market value of facility assets less

expenses associated with closure and

liquidation. The financial question

underlying this comparison is whether

the facility is worth more in liquidation

or in its current operation (i.e., as a

going concern). If the liquidation value

exceeded the going-concern value, then

facility ownership is presumed to see a

reward for terminating the facility’s

business and liquidating its assets.

If a facility failed both tests, then the

facility was presumed to be in jeopardy

of financial failure independent of the

application of the MP&M effluent

guideline and was excluded from

further consideration in the analysis of

effluent guideline impacts. Failure of

the after-tax cash flow tests means that

the facility is incurring a cash loss and

is thus under financial pressure to alter

its business to prevent future losses.

Failure of the liquidation value/goingconcern value test means that facility

ownership would benefit financially by

terminating operations and liquidating

facility assets. The combination of these

two circumstances leads to the

expectation that facility management

and ownership may decide to cease

business at the facility independent of

the application of an MP&M effluent

guideline. Facilities failing only one test

were carried forward to the postcompliance analysis; because of their

more fragile condition, these facilities

were more likely to fail that analysis.

b. Post-Compliance Closure Analysis

The Post-Compliance Closure analysis

is identical in structure to the Baseline

Closure Analysis with the exception

that the after-tax cash flow amounts

used in the After-Tax Cash Flow test

and in the Liquidation Value and GoingConcern Value Comparison test are

adjusted to reflect the annual cash

outlays for financing and operating the

pollution prevention and treatment

systems needed to comply with an

MP&M effluent guideline. The

adjustments to cash flow reflect the

annualized costs of purchasing and

financing equipment for compliance

with the alternative regulatory options

and include allowances for the cost of

debt and equity financing. In addition,

the cash flow adjustments reflect the

annual costs incurred by facilities for

operating and maintaining the pollution

prevention and treatment systems

needed for compliance. The capital cost

and operating and maintenance costs

that underlie these cash flow

adjustments were estimated by EPA on

the basis of engineering studies of

pollution prevention and treatment

system needs at sample MP&M facilities

for complying with alternative

regulatory options.

In the same way as for the Baseline

Closure Analysis, a facility was judged

likely to close as a result of regulation

only if the facility fails both the AfterTax Cash Flow Test and the Liquidation

Value and Going-Concern Value

Comparison Test. The requirement to

fail both tests again rests on the logic

that negative cash flow provides the

impetus for considering facility closure

to avoid future losses and the excess of

liquidation value over going concern

value provides the reward for doing so.

The analysis of post-compliance

facility closures was undertaken for the

sample facilities that were not assessed

as baseline closures. These results were

then extrapolated to the facility

population using sample weights. As

discussed above, facility closure is

considered a severe economic impact as

all employment and production from

the facility is assumed to be lost as a

result of closure. Moreover, for this

analysis, none of the production or

employment losses were assumed to be

offset by possible increases in MP&M

production activity at other facilities

that remain in production. Thus, the

assumption of full loss of employment

and production in closing facilities is

conservative and overstates possible

employment and production impacts.

c. Analysis of Financial Stress Short of

Closure

The analysis of Financial Stress Short

of Closure identifies facilities whose

financial condition is so weak as to

imply difficulty in financing the

treatment system investments for

compliance with an MP&M effluent

guideline. This analysis was undertaken

only for those facilities that passed the

preceding Facility Closure analysis.

Facilities that fail the Financial Stress

analysis were judged as likely to

experience a financial impact that is less

severe than closure as the result of

efforts to comply with an MP&M

effluent guideline. However, they would

be expected to incur significant

financial stress from undertaking

compliance-related investments and/or

incurring the operating cost burdens of

compliance. Financing assistance might

be required from the parent firm or

through an equity infusion or other

financial restructuring. These facilities

or firms are projected to become among

the poorer, but still viable, financial

performers in an industry. Although

they are not projected to fail or

otherwise terminate operations directly

because of compliance requirements,

the deterioration in their financial

performance would presumably leave

them at greater risk of failure from other

factors in their business environment.

The analysis of Financial Stress Short

of Closure was based on two tests of

financial performance and condition

calculated at the facility level. The

measures of financial performance and

condition—pre-tax return on assets and

interest coverage ratio—are among the

more important criteria reviewed by

creditors and equity investors in

determining whether and under what

terms to provide financing to a firm.

These measures also provide insight

into the ability of firms to generate

funds for compliance investments from

internally generated equity—that is,

from after-tax cash flow. The basis for

evaluating these measures was by

comparison of the facility values with

industry norms obtained from

secondary sources.

The analyses of pre-tax return on

assets (ROA) and interest coverage ratio

(ICR) were performed by first

calculating ROA and ICR values for

facilities independent of the financial

effects of complying with an effluent

guideline. The ROA and ICR values

were then adjusted to reflect the

expected changes in facility finances

resulting from installing and operating

the pollution prevention and treatment

systems needed for effluent guidelines

compliance. As a result of the
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28239

6RMA provides financial statistics based on bank

credit reports from public-reporting and nonpublic-reporting firms in a variety of industries.

compliance-related outlays, if a facility’s

ROA or ICR fell below industry norms,

the facility was judged likely to incur a

moderate impact (i.e., financial stress

short of closure) as a result of regulatory

compliance. The industry norms for

evaluating ROA and ICR were

developed from data reported in Robert

Morris Associates Annual Statement

Summaries (RMA).6 Specifically, facility

ROA and ICR values were compared

with the lowest quartile (i.e., 25th

percentile) value for the respective

financial measures as calculated from

RMA data for the relevant industries

over the period 1985–1992.

TABLE 4.—SUMMARY OF FACILITY IMPACT METHODOLOGY

Impact category Description Analysis Significance of negative finding

1. Baseline Closure ...................... Identifies facilities that are in jeopardy of financial failure regardless of the promulgation of effluent guidelines.Two tests: 1. After-tax cash flow

negative? and 2. Liquidation

value exceed going concern

value?

Facilities failing both tests are

considered a baseline closure

and excluded from subsequent

analyses.

2. Post-Compliance Closure ......... Identifies facilities that are likely to

close instead of implementing

the pollution prevention and

treatment systems needed for

effluent guidelines compliance.

Two tests: 1. Post-compliance

after-tax cash flow negative?

and 2. Liquidation value exceed

post-compliance going concern

value?

Facilities failing both tests are projected to close as the result of

regulation, a severe economic

impact.

3. Financial Stress Short of Closure.Identifies facilities with limited ability to finance the pollution prevention and treatment systems

needed for effluent guidelines

compliance.

Two tests: 1. Decline in pre-tax

ROA to a level that jeopardizes

access to financing? or 2. Decline in ICR to a level that jeopardizes access to financing?

Facilities failing either test are

likely to experience financial

weakness as the result of regulation, a moderate economic impact.

E. Estimated Facility Economic Impacts

The findings from the facility impact

analysis are summarized below.

1. Baseline Closure Analysis

The estimated baseline closures for

both indirect and direct discharge

facilities are summarized in Table 5. Of

the estimated 10,601 discharging

facilities, 13.9 percent or 1,471 facilities

were assessed as baseline closures from

the financial analyses outlined above.

The 1,471 baseline closures include

1,413 indirect dischargers, or 16.2

percent of indirect dischargers, and 58

direct dischargers, or 3.1 percent of

direct dischargers. The facilities

estimated to close in the baseline

analysis are in jeopardy of financial

failure independent of the promulgation

of the MP&M regulation. The estimated

baseline closures are removed from the

subsequent post-compliance analysis of

regulatory impacts.

TABLE 5.—SUMMARY OF BASELINE

CLOSURE ANALYSIS

Total

Indirect

dischargers

Direct

dischargers

Facilities in

Analysis

(dischargers only) ... 10,601

100.0%

8,706

82.1%

1,895

17.9%

TABLE 5.—SUMMARY OF BASELINE

CLOSURE ANALYSIS—Continued

Total

Indirect

dischargers

Direct

dischargers

Baseline

Failures

(percent

failing in

class) ....... 1,471

13.9%

1,413

16.2%

58

3.1%

Facilities in

Analysis

(percent in

class) ....... 9,130

86.1%

7,293

83.8%

1,837

96.9%

2. Post-Compliance Impact Analysis

The findings from the PostCompliance Impact Analyses are

summarized below. Findings are

presented first for the PSES options

considered for indirect discharging

facilities, and then for the BAT/BPT

options considered for direct

discharging facilities. A third section

presents aggregate findings for the

proposed PSES and BAT/BPT options

for both discharger classes. In each

discussion, findings in terms of

estimated facility closure and lost

employment and production are

presented for both the highly unlikely

zero-cost-pass-through case and the

more realistic partial-cost-pass-through

case. The expected impacts of

compliance in terms of estimated total

capital cost and total annual costs are

also summarized. In addition, the

numbers of facilities expected to incur

moderate impacts are discussed.

a. Indirect Dischargers

For indirect discharging facilities,

EPA analyzed the impacts of five

possible PSES regulatory options—

Options 1, 2, 3, 1a, and 2a—as discussed

in Section XIV.C., above, and as

described in Section XII of the technical

discussion. Of the options considered,

EPA is proposing Option 2a as the

preferred PSES regulatory option. As

discussed in Section XII, Option 2a

embodies best available technology for

reducing the industry’s effluent

discharges. In addition, EPA estimates

that Option 2a will impose very modest

economic impacts and is thus

economically achievable. The estimated

facility-level impacts associated with

each of the regulatory options are

discussed below and presented in Table

6. The discussion first reviews the

impact findings for the three PSES

options that EPA initially evaluated for

proposal: Options 1, 2, and 3. The

discussion then reviews the impact

findings for the two PSES options that

were subsequently developed: Option

1a and the PSES proposal, Option 2a. As

described previously, Option 1a applies

the requirements of Option 1 or Option

2 to facilities based on whether facilities

are ‘‘low’’ flow (i.e., discharge volume of

less than 1,000,000 gallons per year) or

‘‘large’’ flow (i.e., discharge volume of at

least 1,000,000 gallons per year), while
28240 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

Option 2a applies the requirements of

Option 2 to only ‘‘large’’ flow facilities.

i. Impacts of Option 1: Lime and Settle

Treatment

Zero-Cost-Pass-Through Analysis

Of the 7,293 indirect discharging

facilities subject to regulation, EPA

estimates that 161 facilities or 2.2

percent could be expected to close as

the result of the Option 1 regulation.

The employment and shipments losses

associated with these facility closures

are estimated at 3,001 full-time

equivalent (FTE) positions and $370

million, respectively (all amounts in

1994 dollars). The estimated

employment and shipments losses

amount to 0.14 percent and 0.08

percent, respectively, of the total values

for indirect discharging facilities that

pass the baseline closure analysis and

are thus the basis for the postcompliance analysis. The estimates of

possible facility closures and associated

losses in employment and shipments

are probably substantial overestimates

because of the assumption of zero-costpass-through and because the analysis

does not account for the likelihood that

non-closing facilities will absorb some

of the lost production and employment

from closing facilities. In addition to the

facility closure impacts, another 42

facilities would be expected to incur

financial stress short of closure, a

moderate economic impact, under

Option 1. EPA estimates that industry

would incur capital costs of $276

million for complying with Option 1.

The estimated total annualized, after-tax

cash cost to industry, which reflects

private costs of capital and expected tax

treatment of capital outlays and annual

expenses, amounts to $202 million.

TABLE 6.—ESTIMATED IMPACTS OF REGULATORY COMPLIANCE, INDIRECT DISCHARGERS

[Dollar values in $000, 1994]

Options initially considered for proposal Subsequent options

Option 1 Option 2 Option 3 Option 1a Option 2a

Facilities in Analysis ................................................................................. 7,293 7,293 7,293 7,293 1,792

Severe Impacts (closing facilities)

Zero-Cost-Pass-Through Analysis (unrealistic worst case)

Number of Facilities ................................................................................. 161 151 227 151 7

Percent of Class ....................................................................................... 2.20% 2.07% 3.11% 2.07% 0.39%

Employment (FTEs) ................................................................................. 3,001 2,354 18,215 2,354 540

Value of Shipments .................................................................................. $369,997 $235,852 $2,350,346 $235,852 $133,678

Moderate Impacts (financial stress short of closure)

Number of Facilities ................................................................................. 42 124 184 54 12

Financial Impacts on Complying Facilities:

Capital Cost ....................................................................................... $275,798 $436,293 $1,174,721 $437,209 $350,853

Total Annual Compliance Cost:

Tax-adjusted * .................................................................................... $202,115 $213,530 $615,530 $208,639 $142,467

No adjustments † ............................................................................... $271,020 $267,544 $783,691 $259,994 $171,134

Severe Impacts (closing facilities)

Partial-Cost-Pass-Through Analysis

Number of Facilities ................................................................................. 91 52 160 82 7

Percent of Class ....................................................................................... 1.25% 0.72% 2.20% 1.12% 0.39%

Employment (FTEs) ................................................................................. 1,714 892 7,710 1,068 540

Value of Shipments .................................................................................. $325,896 $177,109 $858,207 $191,751 $133,678

Moderate Impacts (financial stress short of closure)

Number of Facilities ................................................................................. 0 41 66 12 12

Financial Impacts on Complying Facilities:

Capital Cost ....................................................................................... $279,029 $439,840 $1,195,482 $440,441 $350,853

Total Annual Compliance Cost:

Tax-adjusted * .................................................................................... $203,647 $215,274 $629,618 $210,171 $142,467

No adjustments † ............................................................................... $272,914 $269,717 $802,156 $261,888 $171,134

*‘‘Tax-adjusted’’ compliance costs are an estimate of the annual cash compliance cost to industry and reflect private costs of capital and expected tax treatment of capital outlays and annual expenses.

† Compliance costs with ‘‘No adjustments’’ are an estimate of the total annual cost of compliance without tax adjustments and with capital

costs annualized on the basis of a real social discount rate.

Partial-Cost-Pass-Through Analysis

The more realistic, partial-cost-passthrough analysis shows fewer impacts

under Option 1. Among indirect

dischargers, 91 facilities or 1.3 percent

would be expected to close as a result

of such regulation and no additional

facilities are expected to incur moderate

economic impacts. Employment and

shipments losses associated with

closing facilities are estimated at 1,714

FTEs (0.08 percent of total for indirect

discharging facilities in the postcompliance analysis) and $326 million

(0.07 percent of total) respectively.

Because additional facilities are

expected to come into compliance

(instead of closing) under the partialcost-pass-through analysis, the costs of

compliance are estimated to be

modestly higher. Total capital costs of

compliance are estimated at $279

million and total annualized
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28241

compliance costs are estimated at $204

million, tax-adjusted.

ii. Impacts of Option 2: In-Process Flow

Reduction and Pollution Prevention and

Lime and Settle Treatment

Zero-Cost-Pass-Through Analysis

Under Option 2, EPA estimates that

151 facilities or 2.1 percent could be

expected to close as the result of

regulation. The employment and

shipments losses associated with these

facility closures are conservatively

estimated at 2,354 FTEs (0.11 percent of

total) and $236 million (0.05 percent of

total), respectively. In addition to the

facility closure impacts, another 124

facilities are expected to incur financial

stress short of closure because of

regulation. EPA estimates that industry

will incur capital costs of $436 million

for complying with Option 2. The

estimated total annualized, after-tax

cash cost to industry, which reflects

private costs of capital and expected tax

treatment of capital outlays and annual

expenses, amounts to $214 million.

Partial-Cost-Pass-Through Analysis

Under the more realistic, partial-costpass-through analysis, 52 facilities or

0.7 percent of indirect dischargers

passing the baseline analysis are

expected to close as a result of

regulation and another 41 facilities are

expected to incur moderate economic

impacts. Employment and shipments

losses associated with closing facilities

are estimated at 892 FTEs (0.04 percent

of total) and $177 million (0.04 percent

of total) respectively. Total capital costs

of compliance are estimated at $440

million and total annualized

compliance costs are estimated at $215

million, tax-adjusted.

iii. Impacts of Option 3: Advanced Endof-Pipe Treatment

Zero-Cost-Pass-Through Analysis

Impacts under Option 3 are estimated

to be markedly higher than those for

Options 1 or 2. Under Option 3, EPA

estimates that 227 facilities or 3.1

percent could be expected to close as

the result of regulation. The

employment and shipments losses

associated with these facility closures

are conservatively estimated at 18,215

FTEs (0.87 percent of total) and $2,350

million (0.52 percent of total),

respectively. In addition to the facility

closure impacts, another 184 facilities

are expected to incur financial stress

short of closure because of regulation,

again considerably higher than for the

other options considered. Compliance

costs are also considerably higher for

Option 3. EPA estimates that industry

will incur capital costs of $1,175 million

for complying with Option 3. The

estimated total annualized, after-tax

cash cost to industry, which reflects

private costs of capital and expected tax

treatment of capital outlays and annual

expenses, amounts to $616 million.

Partial-Cost-Pass-Through Analysis

Although impacts are moderated

under the more realistic partial-costpass-through analysis (in relation to the

zero-cost-pass-through analysis), they

still remain considerably higher than

the impacts estimated for the other

options. Among indirect dischargers,

160 facilities or 2.2 percent of facilities

passing the baseline analysis are

expected to close as a result of

regulation and another 66 facilities are

expected to incur moderate economic

impacts. Employment and shipments

losses associated with closing facilities

are estimated at 7,710 FTEs and $858

million respectively. Total capital costs

of compliance are estimated at $1,195

million and total annualized

compliance costs are estimated at $630

million, tax-adjusted.

iv. Impacts of Option 1a: Tiered PSES

for ‘‘Low’’ Flow and ‘‘Large’’ Flow Sites

Zero-Cost-Pass-Through Analysis

Under Option 1a, which applies the

limitations of Option 1 or Option 2

based on facility discharge volume, EPA

estimates that 151 facilities or 2.1

percent could be expected to close as

the result of regulation. The

employment and shipments losses

associated with these facility closures

are conservatively estimated at 2,354

FTEs (0.11 percent of total) and $236

million (0.05 percent of total),

respectively. All these values are the

same as estimated for Option 2. Under

Option 1a, 54 facilities are expected to

incur financial stress short of closure, a

moderate economic impact. EPA

estimates that industry will incur

capital costs of $437 million for

complying with Option 1a, or very

slightly greater than for Option 2.

However, the estimated total

annualized, after-tax cash cost to

industry, which reflects private costs of

capital and expected tax treatment of

capital outlays and annual expenses,

amounts to $209 million, which is about

$5 million less than estimated for

Option 2.

Partial-Cost-Pass-Through Analysis

The more realistic, partial-cost-passthrough analysis again shows fewer

impacts than the zero-cost-pass-through

analysis. Among indirect dischargers, 82

facilities or 1.1 percent are expected to

close as a result of regulation and only

12 facilities are expected to incur

moderate economic impacts.

Employment and shipments losses

associated with closing facilities are

estimated at 1,068 FTEs (0.05 percent of

total) and $192 million (0.04 percent of

total), respectively. Total capital costs of

compliance are estimated at $440

million and total annualized

compliance costs are estimated at $210

million, tax-adjusted.

v. Impacts of Option 2a: In-Process Flow

Reduction and Pollution Prevention and

Lime and Settle Treatment for ‘‘Large’’

Flow Sites

Zero-Cost-Pass-Through Analysis

Among the five PSES options that

EPA analyzed, the proposed Option 2a,

which applies the limitations of Option

2 to large flow facilities and exempts

low flow facilities from regulation,

achieves the lowest impacts in terms of

facility closures, employment losses,

and financial burdens. Under Option 2a,

EPA estimates that a minimal number of

facilities—7—would be expected to

close as the result of regulation. These

7 facilities represent 0.1 percent of the

7,293 indirect discharge facilities found

to pass the baseline closure analysis and

0.4 percent of the 1,792 indirect

discharge facilities that both have a

discharge volume of at least 1,000,000

gallons per year and pass the baseline

closure analysis. The employment and

shipments losses associated with these

facility closures are conservatively

estimated at 540 FTEs (0.03 percent of

total) and $134 million (0.03 percent of

total), respectively. In addition to the

facility closure impacts, 12 facilities are

expected to incur financial stress short

of closure because of regulation. EPA

estimates that industry will incur

capital costs of $351 million to comply

with Option 2a. The estimated total

annualized, after-tax cash cost to

industry, which reflects private costs of

capital and expected tax treatment of

capital outlays and annual expenses,

amounts to $142 million.

Partial-Cost-Pass-Through Analysis

The estimated impacts of Option 2a

under the partial-cost-pass-through case

are the same as the already modest

values estimated for the zero-cost-passthrough case. The estimated closure and

financial impact values remain the

lowest among the five PSES options

analyzed for indirect discharging

facilities.

b. Direct Dischargers

For direct discharging facilities, EPA

analyzed the impacts of three possible
28242 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

BAT/BPT regulatory options—Options

1, 2, and 3—as previously described. Of

these options, EPA is proposing Option

2 because, as discussed above, it

represents the performance achievable

with the best available technology and,

in view of its comparatively modest

economic impacts, is economically

achievable. The estimated facility-level

impacts associated with each of the

regulatory options are discussed below

and presented in Table 7. For direct

dischargers, EPA estimated the same

level of facility closure and compliance

cost impacts under both the zero-costpass-through and partial-cost-passthrough analyses. Thus, these results for

these two cases are not presented

separately. The estimated moderate

impacts—that is, financial stress short of

closure—did vary between the two cost

pass-through cases and these differences

are noted in the summary table and

accompanying discussion.

i. Impacts of Option 1: Lime and Settle

Treatment

Of the 1,837 direct discharging

facilities subject to regulation, EPA

estimates that 18 facilities or 1.0 percent

could be expected to close as the result

of regulation. The employment and

shipments losses associated with these

facility closures are estimated at 158

FTEs (0.03 percent of total employment

for direct discharging facilities passing

the baseline closure analysis) and $6

million (0.01 percent of total shipments

for direct discharging facilities passing

the baseline closure analysis),

respectively. As noted above, the

estimates of possible facility closures

and associated losses in employment

and shipments overstate likely impacts

because the analysis does not account

for the likelihood that non-closing

facilities will absorb some of the lost

production and employment from

closing facilities. Under the zero-costpass-through analysis, an additional 6

facilities are expected to incur financial

stress short of closure because of

regulation, a moderate economic

impact; no facilities are estimated to

incur moderate economic impacts under

the partial-cost-pass-through case. EPA

estimates that industry will incur

capital costs of $47 million for

complying with Option 1. The estimated

total annualized, after-tax cash cost to

industry, which reflects private costs of

capital and expected treatment of

capital outlays and annual expenses,

amounts to $16 million.

TABLE 7.—ESTIMATED IMPACTS OF REGULATORY COMPLIANCE, DIRECT DISCHARGERS

[Dollar values in $000, 1994]

Option 1 Option 2 Option 3

Facilities in Analysis ................................................................................................................................. 1,837 1,837 1,837

Severe Impacts (closing facilities)

Zero-Cost-Pass-Through and Partial-Cost-Pass-Through Analyses (same results)

Number of Facilities ................................................................................................................................. 18 18 90

Percent of Class ....................................................................................................................................... 0.96% 0.96% 4.92%

Employment (FTEs) ................................................................................................................................. 158 158 7,339

Value of Shipments .................................................................................................................................. $6,161 $6,161 $883,577

Moderate Impacts (financial stress short of closure)

Zero-Cost-Pass-Through

Number of Facilities .......................................................................................................................... 6 0 0

Partial-Cost-Pass-Through

Number of Facilities .......................................................................................................................... 0 0 0

Financial Impacts on Complying Facilities

Zero-Cost-Pass-Through and Partial-Cost-Pass-Through Analyses (same results)

Capital Cost .............................................................................................................................................. $47,363 $63,269 $127,369

Total Annual Compliance Cost:

Tax-adjusted* .................................................................................................................................... $16,297 $18,136 $63,979

No adjustments† ............................................................................................................................... $18,181 $19,137 $80,523

*‘‘Tax-adjusted’’ compliance costs are an estimate of the annual cash compliance cost to industry and reflect private costs of capital and expected tax treatment of capital outlays and annual expenses.

† Compliance costs with ‘‘No adjustments’’ are an estimate of the total annual cost of compliance without tax adjustments and with capital

costs annualized on the basis of a real social discount rate.

ii. Impacts of Option 2: In-Process Flow

Reduction and Pollution Prevention and

Lime and Settle Treatment

Under the proposed Option 2, EPA

estimated the same level of facility

closures and associated impacts as for

Option 1; however, moderate facility

impacts are modestly lower and

compliance costs are modestly higher.

Closing facilities are estimated at 18

facilities or 1.0 percent of direct

dischargers passing the baseline

analysis. Associated employment and

shipments losses are again estimated at

158 FTEs (0.03 percent of total) and $6

million (0.01 percent of total),

respectively. In both the zero-cost-passthrough and partial-cost-pass-through

analyses, no additional facilities were

assessed as likely to incur financial

stress short of closure. EPA estimates

that industry will incur capital costs of

$63 million for complying with Option

2. The estimated total annualized, aftertax cash cost to industry, which reflects

private costs of capital and expected tax

treatment of capital outlays and annual

expenses, amounts to $18 million.

iii. Impacts of Option 3: Advanced Endof-Pipe Treatment

In a similar way as for indirect

dischargers, impacts under Option 3 for

direct dischargers are estimated to be

markedly higher than those for Options

1 and 2. Under Option 3, EPA estimates

that 90 facilities or 4.9 percent of direct
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28243

7The impact analysis results for Option 2a/2 are

the same throughout for both the zero-cost-passthrough and partial-cost-pass-through cases.

8An analysis of possible employment increases

that may partially offset these losses is presented in

the next section.

dischargers passing the baseline

analysis could be expected to close as

the result of regulation. The

employment and shipments losses

associated with these facility closures

are conservatively estimated at 7,339

FTEs (1.24 percent of total) and $884

million (1.26 percent of total),

respectively. In both the zero-cost-passthrough and partial-cost-pass-through

analyses, no additional facilities were

assessed as likely to incur financial

stress short of closure, the same result

as estimated for Option 2. Compliance

costs are estimated to be considerably

higher for Option 3 than for Options 1

and 2. EPA estimates that industry will

incur capital costs of $127 million for

complying with Option 3. The estimated

total annualized, after-tax cash cost to

industry, which reflects private costs of

capital and expected tax treatment of

capital outlays and annual expenses,

amounts to $64 million.

c. Aggregate Impacts for the Combined

Regulatory Proposal for Existing

Facilities: Option 2a for Indirect

Discharging Facilities and Option 2 for

Direct Discharging Facilities

Aggregate impacts for both indirect

and direct discharging facilities are

summarized in Table 8, below, for the

proposed regulatory options applicable

to existing facilities: Option 2a for

indirect dischargers (PSES) and Option

2 for direct dischargers (BAT/BPT).

Overall, 3,629 facilities passed the

Baseline Closure analysis (1,837 direct

discharging facilities and 1,792—large

flow—indirect discharging facilities)

and thus are expected to be subject to

regulation. Of this population, 25

facilities or 0.7 percent are expected to

close as a result of regulation in both the

zero-cost-pass through and partial-costpass-through analyses.7 The total

associated employment impact amounts

to 698 FTEs (0.03 percent of the total

employment in facilities passing the

baseline analysis and thus potentially

subject to regulation) and the associated

value of lost shipments amounts to $140

million (0.03 percent of the total

shipments in facilities passing the

baseline analysis and thus potentially

subject to regulation).8 In addition to the

estimated closure impacts, a modest 12

facilities are expected to encounter

financial stress short of closure as a

result of the proposed regulation.

Summed over both indirect and direct

discharging facilities, the total capital

costs of compliance amount to $414

million. Total annualized costs of

compliance are estimated at $161

million, when calculated on an after-tax

basis using private costs of capital.

TABLE 8.—ESTIMATED AGGREGATE IMPACTS OF REGULATORY COMPLIANCE-PROPOSED REGULATORY OPTIONS 2A AND 2

FOR INDIRECT AND DIRECT DISCHARGERS

[Dollar values in $000, 1994]

Option 2a (indirect dischargers)Option 2 (direct dischargers)Sum for both

classes of facilities

Facilities in Analysis ..................................................................................................................... 1,792 1,837 3,629

Severe Impacts (closing facilities)

Zero-Cost-Pass-Through and Partial-Cost-Pass-Through Analysis

Number of Facilities ..................................................................................................................... 7 18 25

Percent of Class ........................................................................................................................... 0.39% 0.96% 0.69%

Employment (FTEs) ..................................................................................................................... 540 158 698

Value of Shipments ...................................................................................................................... $133,678 $6,161 $139,839

Moderate Impacts (financial stress short of closure)

Number of Facilities ..................................................................................................................... 12 0 12

Financial Impacts in Complying Facilities:

Capital Cost .......................................................................................................................... $350,853 $63,269 $414,122

Total Annual Compliance Cost:

Tax-adjusted ......................................................................................................................... $142,467 $18,136 $160,602

No adjustments † ................................................................................................................... $171,134 $19,137 $190,270

*‘‘Tax-adjusted’’ compliance costs are an estimate of the annual cash compliance cost to industry and reflect private costs of capital and expected tax treatment of capital outlays and annual expenses.

† Compliance costs with ‘‘No adjustments’’ are an estimate of the total annual cost of compliance without tax adjustments and with capital

costs annualized on the basis of a real social discount rate.

F. Labor Requirements and Possible

Employment Benefits of Regulatory

Compliance

Firms will need to install and operate

compliance systems to comply with an

effluent limitations guideline for the

MP&M industry. The manufacture,

installation, and operation of these

systems will require use of labor

resources. To the extent that these labor

needs translate into employment

increases in affected firms, a MP&M rule

has the potential to generate

employment benefits. If realized, these

employment benefits may partially

offset the employment losses that are

expected to occur in facilities impacted

by the rule. The employment effects that

would occur in the manufacture,

installation, and operation of treatment

systems are termed the ‘‘direct’’

employment benefits of the rule.

Because these employment effects are

directly attributable to the MP&M rule,

they are conceptually parallel to the

employment losses that were estimated

for the facilities that are expected to

incur significant impacts as a result of

the MP&M rule.

In addition to direct employment

benefits, the MP&M rule may generate

other employment benefits through two

mechanisms. First, employment effects
28244 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

may occur in the industries that are

linked to the industries that

manufacture and install compliance

equipment; these effects are termed

‘‘indirect’’ employment benefits. For

example, a firm that manufactures the

pumps, piping and other hardware that

comprise a treatment system will

purchase intermediate goods and

services from other firms and sectors of

the economy. Thus, increased economic

activity in the firm that manufacturers

the treatment system components has

the potential to increase activity and

employment in these linked firms and

sectors. Second, the increased payments

to labor in the directly and indirectly

affected industries will lead to increased

purchases from consumer-oriented

service and retail businesses, which in

turn lead to additional labor demand

and employment benefits in those

businesses. These effects are termed

‘‘induced’’ employment benefits.

In view of these possible employment

benefits, EPA estimated the labor

requirements associated with

compliance with the proposed MP&M

Phase I regulatory option: Option 2a for

indirect dischargers and Option 2 for

direct dischargers. Labor requirements—

and thus the possible employment

benefits— were estimated in two steps.

EPA first estimated the direct

employment effects associated with the

manufacture, installation, and operation

of compliance equipment. Second, EPA

considered the additional employment

effects that might occur through the

indirect and induced effect mechanisms

outlined above.

1. Direct Labor Requirements of

Complying With the Proposed

Regulation

EPA separately analyzed each

component of the direct labor

requirements: manufacturing, installing,

and operating compliance equipment.

The analysis is based on the compliance

cost estimates developed for the

economic impact analysis of the MP&M

regulation. Compliance requirements

and associated costs were estimated for

each facility in the Survey that was

assessed as incurring costs. For the labor

requirements analysis, compliance costs

and their associated labor requirements

were considered only for those facilities

that were not assessed as a baseline or

compliance related closure. That is, the

analysis considered the labor

requirement effects associated only with

those facilities that, upon compliance

with the rule, would be likely to

continue MP&M production activities.

EPA estimated the direct labor

requirements for manufacturing and

installing compliance equipment based

on the cost of the equipment and its

installation, and labor’s expected share

of cost in manufacturing and installing

the equipment. The labor input was

estimated in dollars based on

information contained in the National

Input-Output Tables assembled by the

Bureau of Economic Analysis in the

Department of Commerce. In particular,

the direct requirements matrix identifies

the value of each input, including labor,

that is required to produce a one dollar

value of output for a subject industry.

The industries in the input-output

tables that were used as the basis for

this analysis are: the Heating, Plumbing,

and Fabricated Structural Metal

Products Industry (Bureau of Economic

Analysis industry classification 40) for

compliance equipment manufacturing;

and the Repair and Maintenance

Construction Industry (Bureau of

Economic Analysis industry

classification 12) for compliance

equipment installation. The dollar value

of labor’s contribution was converted to

a full-time employment equivalent

based on a yearly labor cost of $56,244

in 1994 dollars (including benefits and

payroll taxes). Because compliance

equipment purchase and installation are

considered one-time outlays, the labor

requirements for these activities were

annualized over a 15-year period at the

seven percent social discount rate.

For the analysis of the labor required

to operate compliance equipment, EPA

used the estimates of annual labor hours

that were developed as the basis for

assessing the annual operating and

maintenance costs of the MP&M

regulatory options.

From these analyses, EPA estimated

an annual direct labor requirement of

1,594 full-time equivalent positions

(FTEs) for complying with the combined

regulatory proposal for existing

facilities: Option 2a for indirect

dischargers and Option 2 for direct

dischargers (Option 2a/2). Of this total,

the annualized labor requirements for

manufacturing and installing

compliance equipment are 187 and 85

FTEs, respectively. Compliance

equipment operation is estimated to

require 1,322 FTEs annually. The

corresponding annual estimated

payments to labor is $89,664,000 (1994

dollars) (see Table 9).

TABLE 9.—ANALYSIS OF POSSIBLE EMPLOYMENT GENERATION EFFECTS OF PROPOSED REGULATORY OPTIONS FOR THE

MP&M INDUSTRY

[All dollar amounts in thousands of 1994 dollars]

Total weighted

expenditures

Labor cost

share of production value 1

Labor cost component Direct labor requirements 3

One-time

basis Annual basis 2 One-timebasis Annual basis

Option 2a for Indirect Dischargers and Option 2 for Direct Dischargers

Direct Labor Effects From Compliance

Equipment:

Manufacturing .................................... $308,981 31.02% $95,833 $10,522 1,704 187

Installation ......................................... $102,994 42.23% $43,497 $4,776 773 85

Operation ........................................... ....................... ....................... ....................... $74,367 ....................... 1,322

Total Direct Labor Effects .............. ....................... ....................... ....................... $89,664 ....................... 1,594

1Source: U.S. Department of Commerce, The 1982 Benchmark Input-Output Accounts of the United States, December 1991. The labor cost

share of production value for compliance equipment manufacturing is based on the input-output composition of the Heating, Plumbing, and Fabricated Structural Metal Products Industry (Bureau of Economic Analysis industry classification 40). The labor share of production value for compliance equipment installation is based on information for the Repair and Maintenance Construction Industry (Bureau of Economic Analysis industry classification 12). 2Annualized over 15 years at the social discount rate of 7 percent.

3 Number of jobs calculated on the basis of an average hourly labor cost of $24.00 ($1989) and 2,000 hours per labor-year. The annual labor

cost of $48,000 ($1989) was brought forward as $56,244 for 1994.
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28245

2. Indirect and Induced Labor

Requirements of Complying With the

MP&M Rule

In addition to its direct labor effects,

an MP&M effluent guideline may also

generate labor requirements through the

indirect and induced effect mechanisms

described above. EPA assessed the

indirect and induced employment

effects of the proposed regulatory

options by use of multipliers that relate

aggregate economic effects, including

indirect and induced effects, to direct

economic effects. Using a range of

multipliers from previous studies of the

aggregate employment effects of general

water treatment and pollution control

expenditures, EPA estimated that the

total labor requirement effect would

range from 3,900 to 6,400 FTEs for the

proposed Option 2a/2 . The lower end

of this range reflects the use of lower

multiplier values and conservative

assumptions regarding effects on

economic activity in industries linked to

the MP&M industry. The higher end of

the range reflects the higher multiplier

values and assumes full incurrence of

indirect economic effects in industries

linked to the MP&M industry.

G. Community Impacts

EPA expects that the employment

losses resulting from MP&M facility

closures will not have a significant

impact on the national economy.

However, employment losses may be

significant at the local level if facility

closures are concentrated regionally or

if they occur in smaller communities.

Therefore, EPA examined the

community level employment impacts

that may result from the proposed

regulatory options for the MP&M

industry. Community impacts were

assessed by estimating the expected

change in employment in communities

with MP&M facilities that are affected

by regulation. Possible community

employment effects include the lost

employment in facilities that are

expected to close because of regulation,

and related employment losses in other

businesses in the affected community.

These employment losses are

considered significant if they are

expected to exceed one percent of the

pre-regulation level of employment in

the affected communities. For such

comparisons, a community is generally

defined as the area in which employees

may reasonably commute to work—

typically a Metropolitan Statistical Area

(MSA), or county if the affected

community is not contained within a

MSA.

To understand the significance of

community employment impacts from

the proposed regulation, Option 2a/2,

EPA performed two analyses of

expected community employment

impacts. First, EPA examined the

community employment impacts based

on the known location of the sample

facility closures estimated to result from

each of the proposed regulatory options.

Because the location of these sample

facilities is known, it is possible to

compare the expected employment loss

from closure, including losses in related

businesses, with the pre-regulation

employment in the affected community,

defined as either the MSA or the county

in which the sample facility closure is

located. This analysis directly tests the

significance of employment losses in the

communities in which the estimated

closing sample facilities are located.

Second, EPA examined the

significance of expected facility closures

taking into account the employment

losses from the closing facilities in the

underlying facility population that are

represented by the sample facility

closures. Because the locations of these

non-sample closing facilities are not

known, it was not possible to measure

the significance of the associated

employment losses in specific

communities. Instead, EPA distributed

these employment losses among states

and assessed their significance at the

state level, taking into account the

estimated job losses in both MP&M

facilities and in related businesses.

In addition to these analyses of the

impact of employment losses, EPA also

considered the effect of possible

employment gains as discussed in the

preceding section at the state level.

Specifically, EPA distributed the

possible employment gains among states

and calculated a net potential

employment impact by state taking into

account the expected effect of both

facility closures and labor demands

from compliance-related outlays.

1. Assessment of Community Impacts

for Estimated Sample Facility Closures

To assess the significance of facility

closures and associated employment

losses in specific communities, EPA

compared the employment loss from

estimated sample facility closures,

including losses in related businesses,

to the pre-regulation level of

employment in the communities in

which the sample facilities are located.

For the proposed Option 2a/2 (Option

2a for indirect dischargers and Option 2

for direct dischargers), the facility

closure analysis indicated that three

sample facilities would be expected to

close as a result of regulation. Two of

the three sample facilities are located in

California: 1 in Merced County, 1 in the

Los Angeles-Long Beach MSA. The

third facility is located in Virginia, in

the Norfolk-Virginia Beach-Newport

News MSA. The total of employment

losses in these sample facilities amounts

to 168 FTEs, or an average of 56 FTEs

per closing sample facility (see Table

10).

TABLE 10.—COMMUNITY EMPLOYMENT IMPACTS IN ESTIMATED SAMPLE CLOSING FACILITIES

MSA or county Pre-regulation

employment

Facilities affected

MP&M state

multiplier

Total employment loss

in MSA

Number Empl.

(FTEs) FTEs

As % of preregulation employment

Los Angeles-Long Beach ....................................................... 4,173,000 1 97 2.72 264 0.01%

Merced County ....................................................................... 64,617 1 62 2.72 169 0.26%

Norfolk-Virginia Beach-Newport News ................................... 594,463 1 9 2.27 20 0.00%

Source: U.S. Environmental Protection Agency.

In addition to the primary

employment losses (i.e., those that occur

in the estimated MP&M facility

closures), employment losses may also

occur through the secondary impact

mechanism. Such secondary

employment losses may occur in: (1)

Industries that are economically linked

to MP&M industries and (2) consumer

businesses whose employment is

affected by changes in the earnings and

expenditures of the employees in the

directly and indirectly affected

industries. To assess these secondary

employment losses, EPA calculated
28246 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

state-specific, composite MP&M

employment multipliers that are based

on the estimated relationship of

employment in MP&M industry sectors

to total state employment, and the

composition of employment within a

state among the seven MP&M Phase I

sectors. These state-specific composite

employment multipliers were calculated

from Regional Input-Output Modeling

System (RIMS) multipliers developed by

the Bureau of Economic Analysis (BEA)

within the Department of Commerce.

To calculate the expected total

employment loss (i.e., considering both

primary and secondary employment

impacts) in the communities in which

estimated sample facility closures are

located, EPA multiplied the

employment loss in the estimated

sample facility closures by the

composite multiplier for the particular

state. The total losses by MSA ranged

from 20 to 264 FTEs. To assess the

significance of these losses, EPA

compared the estimated total

employment loss with the preregulation employment in the

community, based on 1990 Census data.

For the two facilities that are located in

an MSA, the pre-regulation employment

is the 1990 employment for the MSA.

For the facility that is not located within

a MSA, the pre-regulation employment

is the 1990 civilian employment for the

county in which the facility is located.

This comparison indicated that none of

the estimated sample facility closures

would be expected to have a significant

impact on total community

employment. The largest of the

percentage impacts is estimated for

Merced County, California and amounts

to 0.26 percent. The estimated impact in

the Los Angeles-Long Beach MSA

amounts to only 0.01 percent, while the

impact in the Norfolk-Virginia BeachNewport News MSA rounds to zero

when calculated to the nearest

hundredth of a percent (see Table 10).

2. Assessment of State-Level

Employment Impacts

To capture the effect of employment

losses in the non-sample facilities that

are represented by the estimated sample

facility closures, EPA performed a

second analysis in which the

employment loss in these non-sample

facilities was distributed among states

in proportion to pre-regulation levels of

MP&M industry employment. Because

the community locations of these nonsample, represented facilities is not

known, it is not possible to analyze the

impact of these employment losses in

specific communities as defined by

MSAs or counties.

In addition to the 168 FTE losses in

the 3 sample facility closures, EPA

estimated that another 530 FTE

employment losses and 22 facility

closures would occur in the underlying

population that is represented by the

sample facilities. EPA distributed these

losses among states in proportion to

each state’s estimated MP&M Phase I

sector employment as calculated from

Department of Commerce employment

data. To estimate the total employment

loss by state (i.e., both primary and

secondary losses), EPA multiplied the

primary losses for each state by the

state’s composite employment impact

multiplier as developed from BEA stateand industry-specific multipliers. The

estimated loss by state averaged 36 FTEs

and ranged from a low of zero to a high

of 621; 32 states and the District of

Columbia had a total estimated loss of

less than 25 FTEs. Table 11 summarizes

the estimated facility closures and

associated primary and total

employment losses for the 9 states in

which the total employment loss is

estimated to exceed 50 FTEs. To

evaluate the significance of the

estimated total employment loss by

state, EPA compared the employment

loss values with estimated total civilian

employment for each state, as reported

by the Department of Commerce for

1991.

From these calculations, the estimated

total employment loss as a percent of

total state employment rounds to zero

when calculated to the nearest

hundredth of a percent for all 50 states

and the District of Columbia. The

maximum estimated employment loss

as a percentage of total state

employment amounts to less than onehalf of one-hundredth of one percent of

total state employment (Table 12 lists

the estimated employment loss results

for the 10 states with the highest

percentage impacts). Thus, on the basis

of the findings from this and the

preceding analysis, EPA expects that the

proposed regulation for the MP&M

industry will not cause significant

employment impacts at the local level.

TABLE 11.—ESTIMATED FACILITY CLOSURES AND TOTAL EMPLOYMENT LOSSES FOR STATES WITH LARGEST TOTAL LOSS

State

Estimated total

facility closures

Employment

losses in facilities (FTEs)

Total employment loss

(FTEs)

California ...................................................................................................................................... 4.9 228 621

Ohio .............................................................................................................................................. 1.6 38 116

Illinois ........................................................................................................................................... 1.6 38 116

Pennsylvania ................................................................................................................................ 1.3 31 89

Texas ............................................................................................................................................ 1.3 32 89

Michigan ....................................................................................................................................... 1.1 27 74

New York ...................................................................................................................................... 1.2 30 64

Wisconsin ..................................................................................................................................... 0.8 20 53

Indiana .......................................................................................................................................... 0.7 17 52

Loss in all other states is less than 50 FTEs.

Source: U.S. Environmental Protection Agency.

TABLE 12.—TOTAL EMPLOYMENT LOSS BY STATE, 10 STATES WITH HIGHEST PERCENTAGE LOSS

State

Estimated total

facility closures

Employment

loss in facilities (FTEs)

Total employment loss

(FTEs)

Total state

employment

(1990)

Loss as a percent of total

California ............................................................................... 4.9 228 621 13,714,000 0.005%

Ohio ...................................................................................... 1.6 38 116 5,094,000 0.002%

Wisconsin ............................................................................. 0.8 20 53 2,453,000 0.002%

Connecticut ........................................................................... 0.6 15 35 1,679,000 0.002%

Illinois .................................................................................... 1.6 38 116 5,598,000 0.002%
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28247

TABLE 12.—TOTAL EMPLOYMENT LOSS BY STATE, 10 STATES WITH HIGHEST PERCENTAGE LOSS—Continued

State

Estimated total

facility closures

Employment

loss in facilities (FTEs)

Total employment loss

(FTEs)

Total state

employment

(1990)

Loss as a percent of total

Indiana .................................................................................. 0.7 17 52 2,632,000 0.002%

Michigan ............................................................................... 1.1 27 74 4,125,000 0.002%

Pennsylvania ........................................................................ 1.3 31 89 5,524,000 0.002%

Massachusetts ...................................................................... 0.7 17 45 2,847,000 0.002%

New Hampshire .................................................................... 0.1 3 9 589,000 0.001%

Total percentage employment loss for all states rounds to zero at the nearest hundredth of a percent.

Source: U.S. Environmental Protection Agency.

3. Assessment of State-Level

Employment Impacts Including Possible

Employment Gains

As a final part of the analysis of

community level employment impacts,

EPA considered total state-level

employment effects taking into account

possible employment gains. Possible

labor gains, as discussed in the previous

section, were distributed by state in

proportion to MP&M employment by

state, and state-level employment

multipliers were applied to these gains

to estimate the total potential state-level

employment gain. The multipliers used

for this analysis were selected to

correspond to the industries in which

primary labor effects are expected to

occur. These values were subtracted

from the total employment loss values

calculated in the preceding section to

calculate a net employment loss by

state, taking into account the possible

employment gains from compliancerelated activities.

The estimated employment gain

values range from a low of zero for the

District of Columbia, which has a very

low estimated employment in MP&M

industry activity, to a high of 552 for

California, the state with the largest

estimated MP&M industry employment.

The average possible gain by state

amounted to 81 FTEs. These values

were subtracted from the estimated total

loss values calculated in the preceding

section to yield an estimated net

employment loss by state for the

proposed regulation. For all states but

California, which has an estimated net

employment loss of 69 FTEs, the

estimated potential gain exceeds the

estimated loss from facility closures

(Table 13 summarizes these values for

the 10 states with the highest estimated

loss from facility closures). Thus, the

potential employment gains associated

with compliance activities could

substantially offset the local

employment losses expected to result

from facility closures.

TABLE 13.—EMPLOYMENT LOSS AND POSSIBLE GAIN BY STATE, 10 STATES WITH HIGHEST ESTIMATED LOSS FROM

FACILITY CLOSURES

State

Total loss from

facility closures

Employment

gain, primary

impact only

Total gain with

multiplier

Net employment loss

California .......................................................................................................... 621 209 552 69

Ohio .................................................................................................................. 116 115 345 (229)

Illinois ................................................................................................................ 116 113 344 (228)

Pennsylvania .................................................................................................... 89 93 265 (176)

Texas ................................................................................................................ 89 97 261 (171)

Michigan ........................................................................................................... 74 82 222 (148)

New York .......................................................................................................... 64 90 187 (124)

Wisconsin ......................................................................................................... 53 59 155 (102)

Indiana .............................................................................................................. 52 51 153 (101)

Massachusetts .................................................................................................. 45 52 130 (86)

Source: U.S. Environmental Protection Agency.

H. Impacts on Firms Owning MP&M

Facilities

The assessment of economic

achievability of the MP&M regulation is

based primarily on the facility-level

impact analysis. However, because the

impacts at the level of the firm may

exceed those assessed at the level of the

facility, particularly when a firm owns

more than one facility that will be

subject to regulation, EPA also

conducted a firm-level impact analysis

for the MP&M regulation. The firm-level

analysis estimates the impact of

regulatory compliance on firms owning

facilities subject to MP&M effluent

guidelines.

Secondary financial sources and DCP

responses provided income statement

and balance sheet data for 255 firms that

own 290 of the 396 sampled facilities.

Sufficient data were not available to

analyze compliance impacts on the

parent firms of the remaining 106

facilities.

EPA conducted the firm-level impact

analysis under the zero-cost-passthrough scenario. Because the DCP

sample was not designed as a random

sample of firms, but was instead

directed toward estimating national

characteristics of facilities, the DCP

sample data used in this analysis is not

sample weighted. The findings apply

only to the firms that own sample

facilities and do not represent national

estimates of firm-level impacts.

EPA assessed firm-level impacts on

the basis of changes in measures of

profitability and interest coverage, as

calculated from firm financial

statements. These measures, Pre-Tax

Return on Assets (ROA) and Interest

Coverage Ratio (ICR), are the same as

those used in the facility-level Analysis

of Financial Stress Short of Closure.

When applied at the level of the firm,

these measures indicate the firm’s

ability to attract the capital needed for

expansion in the normal course of

business or for pollution control
28248 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

investments associated with effluent

guidelines compliance. EPA used the

same thresholds of minimum financial

performance for these two measures in

the facility-level Financial Stress Short

of Closure analysis. These thresholds

are based on a weighted average of the

first quartile values for ROA and ICR for

the relevant MP&M industries as

reported in the Robert Morris Associates

publication Annual Statement Studies.

In the same way as for the facility

closure analysis, EPA performed the

firm-level analysis in two steps: (1) a

baseline analysis, which evaluates the

firm’s financial condition independent

of the costs of regulatory compliance;

and (2) a post-compliance analysis,

which accounts for the effects of

compliance costs on the firm-level

financial measures. In the baseline

analysis, firms whose ROA or ICR were

below the industry standards were

considered financially weak

independent of regulation and were

eliminated from further analysis. Firms

that pass both of the thresholds were

subjected to a post-compliance test, in

which their financial measures were

changed to reflect the impact of the

MP&M effluent guideline. Firms that

failed either threshold post-compliance

but pass both pre-compliance are

expected to incur significant financial

stress as a result of compliance with the

regulation.

The firms consist of both single and

multiple facility firms. In the case of

single facility firms, the impact on each

firm’s ROA and ICR is identical to the

impact calculated on the basis of the

responding facility’s financial

statements and estimated compliance

costs, alone. The impacts for single

facility firms correspond to those

calculated in the facility level analysis.

Analysis of firm impacts for multiple

facility firms, however, involves

aggregating and extrapolating financial

and compliance cost data for sample

facilities to the level of the firm. If all

of a firm’s revenues come from activities

subject to the MP&M regulation, the

impact of regulation on that firm will

clearly be greater than the impact on a

firm that participates minimally in

activities subject to the MP&M

regulation, all other things being equal.

Similarly, a firm whose production is

heavily concentrated in foreign facilities

would also experience less significant

impacts than firms primarily producing

in the U.S. (i.e., with more facilities

subject to the MP&M effluent guideline).

The analysis of firm-level impacts for

multiple facility firms is made difficult

because compliance-related information

is available only for the sample facilities

owned by these firms. That is,

information is not available for the nonsample facilities owned by a firm in

terms of whether or not those facilities

would be subject to the MP&M

regulation and, if so, the costs that they

would incur to achieve compliance with

the proposed regulation. Lacking this

information, the firm-level analysis

estimated impacts based on two

scenarios that cover the full range of

possible regulatory applicability to the

non-sample facilities owned by a firm.

The first scenario is based on the

minimum applicability of the regulation

and assumes that the sampled facilities

are the only facilities that engage in

activities subject to regulation in a firm.

In this scenario, the firm level impact of

the regulation is calculated by adjusting

the firm-level financial measures for the

compliance costs incurred by the firm’s

sampled facility(ies).

The second scenario is based on the

maximum applicability of the regulation

and assumes that all of a firm’s activities

are subject to regulation, whether

associated with a sampled facility or

not. In this scenario, EPA calculated a

firm-level impact by extrapolating the

estimated costs of compliance for the

firm’s sample facility(ies) to the level of

the firm assuming that all of the firm’s

revenues are subject to regulation.

Specifically, the compliance costs for

the sample facility (or the sum of costs

over facilities, for those firms owning

more than one sample facility) were

scaled upward by the ratio of firm

revenue to the sum of sampled facility

revenues. This method presumes a

uniform relationship between

compliance costs and revenue over all

the facilities owned by a firm. EPA then

used these estimated firm-level

compliance costs under the scenario in

which all revenue is subject to

regulation to adjust the pre-compliance

measures of financial performance.

Of the 255 firms analyzed, 73 firms,

or slightly less than 29 percent, failed

one or both of the firm financial tests

pre-compliance and therefore failed the

baseline firm-level impact analysis.

These firms are assessed as being

financially weak based on current

circumstances and independent of the

effects of the MP&M regulation. Of these

73 firms, 39 own facilities that were

projected to close under the facilitylevel baseline closure test.

Of the 182 firms that pass the baseline

firm financial test, only one failed either

test under Option 2a/2, even under the

conservative zero-cost-pass-through

assumption (see Table 14). The single

adversely affected firm is a single

facility firm and accounts for less than

0.0001 percent of revenues earned by all

255 sampled firms in the firm-level

impact analysis. These results are

independent of the assumptions about

the share of firm revenue subject to

regulation. The minimum and

maximum impact scenarios yielded

identical results, in terms of financial

test failures. From this analysis, EPA

finds that firm-level impacts are not

likely to be significant.

TABLE 14.—SUMMARY OF FIRM

IMPACT ANALYSIS RESULTS

Number of Firms in Analysis ................ 255

Baseline Failures .................................. 73

Incremental Post-Compliance Failures 1

Source: U.S. Environmental Protection

Agency.

I. Foreign Trade Impacts

Products of the MP&M industry are

traded internationally. Therefore,

changes in domestic production

resulting from effluent regulations may

affect the balance of trade. In particular,

some of the production from facilities

estimated to close because of regulation

may be replaced by foreign producers,

thus changing the U.S. foreign trade

balance. The foreign trade analysis

examines the trade balance effects of

Option 2a/2 under the zero-cost-passthrough assumption. This assumption is

conservative in the sense that it projects

the most post-compliance closures.

Even under this assumption, EPA

estimates that the MP&M industry will

experience less than a 0.01 percent loss

in its trade balance. Therefore, EPA

finds that the proposed effluent

guidelines will not have a significant

adverse impact on the international

trade status of the MP&M Phase I

industry.

The foreign trade impact analysis

identifies three scenarios that span the

likely range of foreign trade responses to

post-compliance closures. Each scenario

describes a possible outcome of the

competition between domestic and

foreign producers to replace the

production loss from closure of

domestic facilities. The three scenarios

are as follows:

1. Worst case. In the worst case

scenario, all production for domestic

consumption and for export by domestic

facilities subject to post-compliance

closure is replaced by foreign sources.

Therefore, the net trade balance

deteriorates by the total amount of

production lost by post-compliance

incremental closures.

2. Best case. In the best case scenario,

all production for domestic

consumption and for export by facilities

subject to closure are replaced in full by

production and exports from other
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28249

domestic facilities. The net trade

balance is unaffected by regulation.

3. Proportional case. Domestic

production of facilities subject to

closure is replaced both by remaining

domestic facilities and by foreign

imports in the same proportions as the

baseline ratio of imports and exports to

the total domestic market. In this

scenario, if, in the baseline case, imports

accounted for half of the domestic

market, then a closing facility’s

production for domestic sales would be

replaced half by imports and half by

other domestic producers. This scenario

is meant to reflect the historical

performance of the MP&M Phase I

industries in competing with foreign

producers for import and domestic

markets.

In the foreign trade impact analysis,

EPA assigned each sample facility that

is expected to close—and its associated

revenue—to one of the three scenarios,

depending on the findings from two

assessments of the facility’s exposure to

competition from foreign producers.

The first assessment is based on sample

facilities’ responses to DCP questions

concerning the magnitude and source of

competition in various markets,

including export and domestic markets.

The second assessment is based on

secondary source data provided by the

Department of Commerce and used in

the industry profile. This assessment

considers the overall competitiveness of

the MP&M industries in import and

export markets, with respect to foreign

competitors.

On the basis of the two assessments,

facilities with significant exposure to

foreign competition were assigned to the

worst case trade impact scenario while

facilities with little expected exposure

to foreign competition were assigned to

the best case trade impact scenario.

Facilities with moderate exposure to

foreign competition were assigned to the

proportional case trade impact scenario.

After assigning each sample facility

closure to a trade impact scenario, EPA

allocated the export and import market

revenues from estimated facility

closures between foreign and domestic

producers according to the rules for the

three trade scenarios. The changes in

exports and imports accruing from all

incrementally closing facilities were

multiplied by their sample weights and

summed to yield an estimate of the

aggregate impact on imports, exports

and the trade balance resulting from

promulgation of the effluent guideline.

Table 15 presents the results from the

foreign trade impact analysis. As shown

in the table, even under the conservative

zero-cost-pass-through assumption, the

proposed effluent guideline will have a

negligible impact on U.S. imports,

exports and the trade balance.

On the basis of sample-weighted

national estimates, EPA estimates that

exports will not be measurably affected

by compliance with the proposed

regulation, while imports are estimated

to increase by approximately $5.3

million, or 0.01 percent of the 1991

imports of the MP&M Phase I industry

commodities, according to Department

of Commerce data. The net effect on the

trade balance is therefore a decline of

$5.3 million, or approximately 0.01

percent of the current trade balance in

MP&M Phase I industry commodities.

TABLE 15.—MP&M PHASE I EFFLUENT GUIDELINE IMPACTS ON FOREIGN TRADE

[Sample Weighted National Estimates for Option 2a/2 ($ millions)]

Exports Imports Trade balance

Baseline ........................................................................................................................................ 112,565.1 72,157.1 40,408.0

Post-Compliance Change ............................................................................................................ 0.0 5.3 ¥5.3

Percent Change From Baseline ................................................................................................... 0.00% 0.01% ¥0.01%

Source: U.S. Environmental Protection Agency and Department of Commerce.

J. Impacts of New Source Performance

Standards and Pre-Treatment Standards

for New Sources

The proposed regulation includes

limitations that will apply to new direct

and indirect discharging sources within

the MP&M Phase I category. EPA

examined the impact of these

regulations for new dischargers to

determine if they would impose an

undue economic and financial burden

on new sources seeking to enter the

MP&M Phase I industry.

As documented in Part 438.16–17 and

Section XIII, EPA proposes to set New

Source Performance Standards (NSPS),

which apply to new facilities that

discharge directly to receiving waters,

on the basis of the Best Achievable

Technology (BAT) limitations as

specified by the proposed Option 2 for

existing direct dischargers. Thus, the

new source limitations for direct

dischargers are the same as those

proposed for existing direct discharge

facilities.

In addition, EPA proposes to set

Pretreatment Standards for New Sources

(PSNS), which apply to new indirect

discharging facilities (i.e., that will

discharge to POTWs), on the basis of the

discharge limitations in PSES Option 2,

as analyzed for existing indirect

discharging facilities. Thus, the new

source limitations for indirect

discharging facilities will differ from the

PSES limitations proposed for existing

indirect discharge facilities.

Specifically, the proposed PSES option

for existing indirect discharge facilities,

Option 2a, applies the mass-based

limitations of Option 2 to large flow

indirect discharge facilities (i.e.,

facilities discharging at least 1,000,000

gallons per year) but applies no

limitations to low flow indirect

discharge facilities (i.e., facilities

discharging less than 1,000,000 gallons

per year). However, for new indirect

dischargers, the proposed PSNS

limitations will apply the mass-based

limitations of Option 2 regardless of the

new facility’s discharge volume.

In general, EPA estimates that, when

new and existing sources face the same

discharge limitations, new sources will

be able to comply with those limitations

at the same or lower costs than those

incurred by existing sources.

Engineering analysis indicates that the

cost of installing pollution control

systems during new construction is

generally less than the cost of

retrofitting existing facilities. Thus, a

finding that discharge limitations are

economically achievable by existing

facilities will also mean that those same

discharge limitations will be

economically achievable to new

facilities.

On the basis of this argument alone,

EPA concludes that those elements of

the effluent limitations that are the same

for both new and existing facilities will

be economically achievable. In fact, the

new source and existing source

limitations are identical except for the

limitations applicable to new indirect

discharging sources with a discharge

volume of less than 1,000,000 gallons

per year. As stated above, these new
28250 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

sources must meet the mass-based

limitations of PSES Option 2, while

existing, low flow indirect discharging

facilities would not be subject to

effluent limitations under the proposed

guideline. Therefore, the only issue

concerning economic achievability of

the new source limitations involves the

application of the PSES Option 2

limitation to new indirect discharging

sources with a discharge volume of less

than 1,000,000 gallons per year.

However, in its analysis of regulatory

impacts on existing facilities, EPA

found that the mass-based limitations of

PSES Option 2 would be economically

achievable by indirect discharging

facilities regardless of discharge volume.

For this reason, EPA additionally

concludes that the new source

limitations applicable to new indirect

discharging facilities will also be

economically achievable by indirect

discharging facilities with flow of less

than 1,000,000 gallons per year.

Therefore, EPA finds that the proposed

NSPS and PSNS limitations will be

economically achievable.

EPA notes that an important reason

for exempting the low flow class of

existing indirect dischargers (less than

1,000,000 gallons per year) from

regulatory requirements is to reduce the

administrative burden to permit writers

that would result from writing massbased permits for the large number of

existing low flow indirect dischargers.

EPA estimates that approximately 63

percent of the existing facilities to

which the regulation could have applied

are low flow indirect dischargers.

However, applying the mass-based

concentration requirements of Option 2

to new facilities will not impose so great

an administrative burden, because new

facilities enter gradually over time.

K. Regulatory Flexibility Analysis

In accordance with the requirements

of the Regulatory Flexibility Act (Public

Law 96-354), the Agency performed a

Regulatory Flexibility Analysis of the

proposed regulation. The purpose of the

Regulatory Flexibility Act is to ensure

that, while achieving statutory goals,

government regulations do not impose

disproportionate impacts on small

entities. The Regulatory Flexibility

Analysis for the proposed regulation is

contained in Chapter 10 of the

Economic Impact Analysis report

referenced above, ‘‘Economic Impact

Analysis Of Proposed Effluent

Limitations Guidelines And Standards

For The Metal Products And Machinery

Industry, Phase I.’’ On the basis of the

Regulatory Flexibility Analysis and as

summarized herein, the Administrator

certifies, pursuant to Section 605(b) of

the Regulatory Flexibility Act, 5 U.S.C.

605(b), that the proposed regulation will

not have a significant economic impact

on a substantial number of small

entities.

In developing the proposed

regulation, EPA sought from the outset

to define a regulation that would not

unreasonably burden small entities. In

particular, EPA considered a number of

regulatory alternatives for indirect and

direct dischargers, each of which was

assessed to have varying degrees of

impact on small entities. In selecting the

proposed regulation from among these

alternatives, EPA balanced several

factors, including: the need for

additional reduction in effluent

discharges from the MP&M industry; the

fact that the MP&M industry is largely

comprised of small business entities;

and the need to achieve additional

reduction in effluent discharges without

imposing unreasonable burdens on

small entities. As a result of these

considerations, EPA expressly framed

the proposed regulation to reduce

impacts on small entities.

Specifically, as discussed in Section

XIV. C., above, EPA settled on the

proposed regulation for indirect

dischargers, Option 2a, after considering

and rejecting the initial Option 2. On

the basis of the facility impact analyses

presented above, EPA determined that

Option 2 would be economically

achievable by indirect discharging

facilities. In accordance with this

finding, EPA initially considered

adopting the mass-based requirements

of Option 2 for all indirect discharging

facilities. However, further analysis

indicated that Option 2 would place

substantial financial burdens on smaller

facilities and, moreover, would

substantially burden permitting

authorities by requiring that mass-based

standards be written for all indirect

discharging facilities, regardless of size

and amount of discharge reduction to be

achieved. For these reasons, EPA

defined and evaluated two additional

options: Option 1a, which applies the

Option 2 requirements to large flow

facilities and the modestly less stringent

Option 1 requirements to low flow

facilities; and Option 2a, which applies

the requirements of Option 2 to large

flow facilities while exempting low flow

indirect discharging facilities from

regulation. EPA found that both of these

additional options would mitigate the

burden of regulation on small

businesses and permitting authorities.

However, EPA found that the latter

option, Option 2a, much more

substantially reduced the closure

impacts and financial burdens among

MP&M facilities owned by small

business and, as well, the regulatory

implementation burden on permitting

authorities. After considering other

factors that also favored Option 2a—

namely, cost effectiveness—EPA

decided to propose Option 2a as the

PSES option for indirect discharging

facilities.

The following sections summarize the

analyses underlying the Agency’s

conclusion that the proposed regulation

will not have a significant economic

impact on a substantial number of small

entities

1. Small Business in the MP&M Industry

EPA analyzed the role of small

entities in the MP&M industry and the

associated impacts that would be caused

by the proposed regulation. These

analyses showed that the MP&M

industry is largely comprised of small

business entities and, accordingly, the

regulation is expected to apply to a

substantial number of small entities.

Specifically, on the basis of Small

Business Administration (SBA) firmemployment size criteria, EPA estimates

that over 75 percent of the estimated

10,601 water discharging facilities in the

MP&M Phase I industries are owned by

a small business. With over 75 percent

of the facilities to which the regulation

is expected to apply defined as small

businesses, EPA also examined the

employment size distribution of the

MP&M facilities to gain provide

additional insight into how smaller

facilities are likely to be affected by the

proposed regulation. From the analysis

of the facility employment distribution,

EPA estimated that 25 percent of waterdischarging facilities have 9 or fewer

employees and that 50 percent of waterdischarging facilities have 79 or fewer

employees.

EPA also found that small facilities

play a substantial role in the economic

performance and contributions of the

MP&M industry. From Department of

Commerce data for 1989, EPA estimates

that over 97 percent of facilities in the

MP&M Phase I industries (including

both water-discharging and nondischarging facilities) have fewer than

250 employees. These relatively small

facilities account for about 49 percent of

total MP&M industry employment, 40

percent of total shipments, and 40

percent of the MP&M industry’s

tribution to gross domestic product.

2. Impacts of the Proposed Regulation

on Small Business

To gauge whether the proposed

regulation would have a significant

impact on a substantial number of small

entities, EPA considered the level of

impacts and compliance costs expected
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28251

to be imposed on small entities. From

these analyses, EPA found that the

proposed regulation will impose

significant economic impacts (i.e.,

facility closures) more frequently among

small business entities than among

MP&M facilities generally. In addition,

these analyses indicated that the

compliance cost burden (as measured by

total annual compliance costs as a

percent of facility revenue) is expected

to be greater among small business

entities than among MP&M facilities

generally. However, for both of these

measures of small business impact—

frequency of facility closures and

compliance cost burden—EPA found

that the absolute levels of impacts were

so slight as to not constitute a

significant economic impact on small

entities. Moreover, the impact levels

under the proposed regulation are much

lower than those that would be expected

under any of the other options that EPA

considered for proposal.

a. Facility Closure Impacts by Business

Size

Table 16 summarizes the findings

from the facility closure analysis

according to business size classification.

The first three columns—Option 1,

Option 2, and Option 3—combine the

results for indirect and direct

dischargers for each of those options.

The latter two columns reflect the

additional options that were developed

for indirect dischargers—Option 1a and

Option 2a—combined with Option 2 for

direct dischargers. Specifically, the

rightmost column, which is labeled

Option 2a/2, combines results for

Option 2a for indirect dischargers and

Option 2 for direct dischargers and thus

represents the proposed regulatory

option. The next column to the left,

which is labeled Option 1a/2, combines

results for Option 1a for indirect

dischargers and Option 2 for direct

dischargers and represents the other

option that EPA defined as an

alternative to the initially selected

Option 2 for indirect and direct

dischargers.

As shown in the table, all estimated

facility closures for Options 1, 2, 1a/2,

and 2a/2 occur among small businessowned facilities, as defined on the basis

of SBA criteria. Only under Option 3 are

closures estimated to occur among

facilities not owned by small

businesses. The analysis according to

facility employment size gives similar

results with estimated facility closures

occurring more frequently in the 1–9

and 10–79 employee size classes.

TABLE 16.—FACILITY CLOSURE IMPACTS BY BUSINESS SIZE

Facility classifications

Regulatory option

Initial options Subsequent options

Option 1 Option 2 Option 3 Option 1a/2 Option 2a/2

Total Estimated Facility Closures ..................................................... 178 169 317 169 25

(as percent of facilities in impact analysis) ................................... 2.0% 1.8% 3.5% 1.8% 0.3%

Closures By SBA Firm-Size Criteria:

Small Business-Owned ............................................................. 178 169 248 169 25

(as percent of class†) ............................................................ 2.6% 2.5% 3.6% 2.5% 0.4%

Other (not Small Business-Owned) .......................................... 0 0 69 0 0

(as percent of class) .............................................................. 0.0% 0.0% 3.1% 0.0% 0.0%

Closures By Facility Employment Class:

1–9 Employees .......................................................................... 83 83 83 83 18

(as percent of class) .............................................................. 4.1% 4.1% 4.1% 4.1% 0.9%

10–79 Employees ...................................................................... 95 84 132 84 5

(as percent of class) .............................................................. 4.0% 3.5% 5.5% 3.5% 0.2%

80 or more Employees .............................................................. 0 2 102 2 2

(as percent of class) .............................................................. 0.0% 0.1% 2.2% 0.1% 0.1%

†‘‘Class’’ refers to the indicated sub-group of facilities (e.g., Small Business-Owned Facilities) and ‘‘percent of class’’ means the percentage of

that group expected to incur facility closure impacts.

Source: Environmental Protection Agency.

Although closure impacts are

concentrated among small entities, the

expected level of closures under the

proposed option is extremely low for

the small entity categorizations

analyzed: 0.4 percent of small businessowned facilities; 0.9 percent of facilities

with 9 or fewer employees; and 0.2

percent of facilities with 10 to 79

employees. Notably, closures among the

small entity categorizations are

substantially higher for all the other

options analyzed. To illustrate, for small

business-owned facilities, the closure

rate ranges from 2.5 percent to 3.6

percent for the other four composite

options presented in the table. Overall,

EPA finds that the rate of expected

facility closures among small business

entities is well within acceptable

bounds.

b. Compliance Cost Impacts by Business

Size

EPA also considered the compliance

costs likely to be incurred by facilities

in complying with the proposed

regulation. EPA assessed compliance

costs in terms of (1) the total annual

compliance costs expected to be

imposed on facilities according to

business size and (2) total annual

compliance cost as a percentage of

facility revenue as a measure of the

relative burden of compliance costs.

i. Analysis of Total Annual Compliance

Costs

Table 17 summarizes total annual

compliance costs by business size

classification of facility for the

alternative regulatory options. Total

annual compliance costs are calculated

as the annual after-tax cash flow impact

on facilities and reflect private costs of

capital and the expected tax treatment

of capital outlays and operating costs of

compliance. This analysis shows that

the aggregate compliance costs to small

entities are substantially lower under

the proposed Option 2a/2 than under all

the other options analyzed. At $63.9

million ($1994), the estimated annual

compliance cost for small businessowned facilities under the proposed

Option 2a/2 is approximately 40 percent

less than the cost estimated for either

the initially selected Option 2 or the

other secondarily defined option,

Option 1a/2. The analysis based on

facility employment size class further

confirms the reduced impact of the

proposed Option 2a/2 on small entities:
28252 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

the total costs of Option 2a/2 among

facilities with 9 or fewer employees are

only about 9 percent of the costs for

Option 2 or Option 1a/2; and the costs

for Option 2a/2 among facilities with 10

to 79 employees are about half of the

costs for Option 2 or Option 1a/2. That

the cost burden of Option 2a/2 on small

business entities is so much lower than

that estimated for the other options

supports EPA’s choice of Option 2a/2 as

the proposed regulatory option and the

finding that Option 2a/2 will not impose

a significant economic impact on small

entities.

TABLE 17.—TOTAL ANNUAL COMPLIANCE COSTS BY BUSINESS SIZE, ALL DISCHARGERS ($000, 1994)

Facility classification

Regulatory option

Initial options Subsequent options

Option 1 Option 2 Option 3 Option 1a/2 Option 2a/2

All Facilities ...................................................................................... 218,412 231,666 679,509 226,781 160,607

By SBA Firm-Size Criteria:

Small Business-Owned ............................................................. 91,414 107,062 330,215 105,431 63,906

Other (not Small Business-Owned) .......................................... 126,998 124,602 349,293 121,349 96,702

By Facility Employment Class:

1–9 Employees .......................................................................... 10,996 11,264 11,781 10,935 974

10–79 Employees ...................................................................... 34,449 37,907 87,482 37,294 18,642

80 or more Employees .............................................................. 172,967 182,494 580,245 178,550 140,991

Source: Environmental Protection Agency.

ii. Analysis of Compliance Costs

Relative to Facility Revenue

Table 18 summarizes the relative

compliance cost burden among facilities

by business size classification. For this

analysis, the compliance cost burden

was assessed as the ratio of total annual

compliance cost to facility revenue.

Table 18 indicates for each option the

average value of compliance costs as a

percentage of revenue for facilities by

size class, and lists the percentage of

facilities in each size class expected to

incur compliance costs exceeding 5

percent of revenue. For several previous

regulations, EPA judged annual

compliance costs that are less than five

percent of facility revenue as not likely

to impose a significant financial burden

on the complying entity.

As shown in Table 18, EPA estimates

that compliance costs as a percentage of

facility revenue will be higher for small

entities than for MP&M facilities

generally both for the proposed Option

2a/2 and, as well, for the other options

considered. However, among small

business-owned facilities, total annual

compliance costs are estimated to

average only 0.11 percent of revenue for

the proposed Option 2a/2. Moreover, in

comparing compliance costs with the 5

percent of revenue threshold, EPA

found that a very small percentage of

small business-owned facilities, only

0.26 percent, are expected to incur total

annual compliance costs exceeding 5

percent of revenue under the proposed

regulatory option. Accordingly, EPA

judges that the proposed regulation’s

cost burden on small entities would be

manageable based on accepted

standards of cost severity.

TABLE 18.—TOTAL ANNUAL COMPLIANCE COSTS AS A PERCENTAGE OF FACILITY REVENUE

[All Dischargers, by Business Size Criteria]

Facility size classes

Regulatory option

Initial options Subsequent options

Option 1 Option 2 Option 3 Option 1a/2 Option 2a/2

Compliance Costs as a Percentage of Facility Revenue, Average Values by Facility Class

All Facilities .............................................................................................. 0.41 0.42 0.65 0.41 0.10

By SBA Firm-Size Criteria:

Small Business-Owned Facilities ...................................................... 0.51 0.53 0.78 0.51 0.11

Other (not Small Business-Owned) .................................................. 0.11 0.11 0.26 0.11 0.06

By Facility Employment Class:

1–9 Employees ................................................................................. 1.09 1.12 1.20 1.08 0.10

10–79 Employees ............................................................................. 0.41 0.42 0.79 0.42 0.12

80 or more Employees ...................................................................... 0.12 0.13 0.36 0.13 0.09

Percentage of Facilities by Class with Compliance Costs Exceeding Five Percent of Revenue

All Facilities .............................................................................................. 0.52 0.47 1.35 0.52 0.19

By SBA Firm-Size Criteria:

Small Business-Owned Facilities ...................................................... 0.69 0.63 1.79 0.69 0.26

Other (not Small Business-Owned) .................................................. 0.00 0.00 0.00 0.00 0.00

By Facility Employment Class:

1–9 Employees ................................................................................. 1.27 1.27 2.78 1.27 0.00

10–79 Employees ............................................................................. 0.94 0.76 2.49 0.93 0.73

80 or more Employees ...................................................................... 0.00 0.00 0.17 0.00 0.00

Source: Environmental Protection Agency.
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28253

3. Small Business Impact Finding

In view of this analysis and in

recognition of the Agency’s efforts, as

summarized above, to define the

proposed option in a way that would

reduce impacts to small entities, EPA

concluded that the facility closure

impacts and compliance cost burdens of

the proposed option will not constitute

an undue impact on small business

entities. Pursuant to Section 605(b) of

the Regulatory Flexibility Act, 5 U.S.C.

605(b), the Administrator certifies that

the proposed regulation will not have a

significant economic impact on a

substantial number of small entities.

L. Cost Effectiveness Analysis of MP&M

Regulatory Options

In addition to the foregoing analyses,

EPA performed a cost-effectiveness

analysis of the alternative regulatory

options for indirect dischargers (PSES)

and direct dischargers (BPT/BAT). This

analysis is detailed in ‘‘CostEffectiveness Analysis of Proposed

Effluent Limitations Guidelines and

Standards for the Metal Products and

Machinery Industry, Phase I’’

(hereinafter ‘‘Cost Effectiveness

Report’’). Cost-effectiveness analysis is

used in the development of effluent

limitations guidelines to evaluate the

relative efficiency of alternative

regulatory options in removing

pollutants from the effluent discharges

to the nation’s waters, and to compare

the efficiency of a proposed regulation

with that estimated for previous

regulations.

The cost effectiveness of a regulatory

option is defined as the incremental

annual cost (in 1981 constant dollars)

per incremental toxic-weighted

pollutant removal for that option. This

definition embodies the following

concepts:

Toxic-weighted removals. Because

pollutants differ in their toxicity, the

reductions in pollution discharges, or

pollutant removals, are adjusted for

toxicity by multiplying the estimated

removal quantity for each pollutant by

a normalizing toxic weight (Toxic

Weighting Factors). The toxic weight for

each pollutant measures its toxicity

relative to copper, with more toxic

pollutants having higher toxic weights.

The use of toxic weights allow the

removals of different pollutants to be

expressed on a constant toxicity basis in

toxic pounds-equivalent (lb-eq). The

removal quantities for the different

pollutants may then be summed to yield

an aggregate measure of the reduction in

toxicity normalized pollutant discharges

that is achieved by a given regulatory

option. Note that cost-effectiveness

analysis does not address the removal of

conventional pollutants (oil and grease,

biological oxygen demand, and total

suspended solids).

Annual costs. The costs used in the

cost-effectiveness analysis are the

estimated annual costs to industry for

complying with the alternative

regulatory options. The annual costs

include the annual expenses for

operating and maintaining compliance

equipment and for meeting monitoring

requirements, and an annual allowance

for the capital outlays for pollution

prevention and treatment systems

needed for compliance. However, unlike

the costs used in the facility impact

analysis, the costs used in the costeffectiveness analysis are calculated on

a pre-tax basis and capital costs are

annualized using an estimated real

opportunity cost of capital to society of

7 percent. Thus, these costs represent

the costs incurred by industry on behalf

of society for compliance with the

proposed regulation. In the facility

impact analysis, costs were considered

on an after-tax basis and reflected the

estimated private after-tax cost of capital

to MP&M firms. In addition, the costs

used in the cost-effectiveness analysis

are calculated in 1981 dollars so that the

cost-effectiveness values for regulations

applying to different industries and that

were developed at different times may

be consistently compared.

Incremental calculations. The

incremental values that are calculated

for a given option are the change in total

annual compliance costs and change in

removals from the next less stringent

option, or the baseline if there is no less

stringent option, where regulatory

options are ranked by increasing levels

of toxic-weighted removals. Thus, the

cost-effectiveness values for a given

option are relative to another option or,

for the least stringent option considered,

the baseline.

The question posed in a costeffectiveness analysis is: what is the cost

to industry of the additional toxicweighted pollutant removals achieved

by a given option relative to the next

less stringent option or the baseline?

The result of the cost-effectiveness

calculation represents the unit cost of

removing the next pound-equivalent of

pollutants and is expressed in constant

1981 dollars per toxic pound-equivalent

removed ($/lb-eq). The costeffectiveness values for a given option

may be compared with those of other

options being considered for a given

regulation and also with those

calculated for other industries or

regulatory settings. Although not

required by the Clean Water Act, costeffectiveness analysis is a useful tool for

evaluating regulatory options for the

removal of toxic pollutants.

EPA performed the cost-effectiveness

analysis for the MP&M regulation

separately for indirect dischargers

(subject to PSES) and direct dischargers

(subject to BAT/BPT). For each of the

regulatory options, the poundsequivalent removed were calculated by

multiplying the estimated pounds

removed of each pollutant by its toxic

weighting factor and summing the toxicweighted removals over all toxic (i.e.,

excluding conventional) pollutants. The

estimated annual compliance costs for

each option (as reported in Section

XIV.D., above) were deflated to 1981

dollars. As discussed above, the costeffectiveness values were then

calculated as the change in compliance

cost, in moving to a given option from

the next less stringent option, divided

by the change in toxic-weighted

removals. The following sections

summarize the results for the two

classes of facilities.

1. Cost-Effectiveness Analysis for

Indirect Dischargers

Table 19 summarizes the costeffectiveness analysis for the PSES

regulatory options applicable to indirect

dischargers. Annual compliance costs

are shown in 1994 dollars and also in

1981 dollars. In addition, pollutant

removals are reported on both an

unweighted and toxic-weighted basis.

The regulatory options are listed in

order of increasing stringency on the

basis of the estimated toxic-weighted

pollutant removals.

As shown in Table 19, Option 2a/2

achieves approximately 12.8 million

pounds of toxic pollutant removals, on

an unweighted basis and 881,300

pounds-equivalent on a toxic-weighted

basis. Because Option 2a/2 is the least

stringent option in terms of pollutant

removals, the cost-effectiveness of this

option is the same as its average cost per

pounds-equivalent removed, $127. EPA

considers this value to be acceptable

when compared to values calculated for

previous regulations.

The next more stringent option,

Option 1, is estimated to achieve

approximately 14.6 million pounds of

toxic pollutant removals on an

unweighted basis and 988,900 poundsequivalent on a toxic-weighted basis,

which is a 107,100 pounds-equivalent

increment over Option 2a/2. With an

estimated annual compliance cost of

$137 million ($1981), or $65 million

more than Option 2a/2, the calculated

cost effectiveness for Option 1’s

removals is $607 per pound-equivalent

of pollutant removed. This costeffectiveness value is higher than the
28254 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

values calculated for other industrial

discharge limitations previously

promulgated by EPA.

In moving from Option 1 to Option

1a, toxic-weighted pollutant removals

increase by 22,100 pounds-equivalent

while costs decrease by $7.2 million.

Thus, the cost effectiveness of Option 1a

relative to Option 1 is a negative $327

per pound-equivalent of additional

pollutant removed. Because Option 1a is

estimated to impose lower cost on

industry and society than Option 1

while, at the same time, achieving

greater toxic-weighted removals, Option

1a may be said to dominate Option 1

from an economic efficiency

perspective. That is, within the context

of the cost-effectiveness analysis,

society would always be better off by

choosing the more stringent Option 1a

over Option 1 because greater toxicweighted pollutant removals would be

achieved by Option 1a but at a lower

total pre-tax cost of compliance.

TABLE 19.—COST EFFECTIVENESS OF REGULATORY OPTIONS FOR THE METAL PRODUCTS AND MACHINERY INDUSTRY

[Indirect Dischargers (PSES)]

Regulatory option

Annual compliance costs Unweighted

pollutant removals (000,

lbs)

Weighted pollutant removals Incremental

cost

($000,000,

1981)

Cost effectiveness ($/lb-eq,

$1981) ($000,000,

1994)

($000,000,

1981) (000, lbs-eq) Incremental(000, lbs-eq)

Option 2a ...................... 171.1 111.9 12,769.7 881.3 881.3 111.9 127

Option 1 ........................ 271.0 177.2 14,611.7 988.9 107.6 65.3 607

Option 1a ...................... 260.0 170.0 14,872.8 1,011.0 22.1 (7.2) (327)

Option 2 ........................ 267.5 174.9 14,878.8 1,011.6 0.6 4.9 8,537

Option 3 ........................ 783.7 512.3 15,612.1 1,105.4 93.8 337.4 3,596

The cost effectiveness for a regulatory option is defined as the incremental cost per incremental removal in toxic pounds equivalent ($/lb-eq)

for that option. The ‘‘increment’’ for a given option is the change in costs or removals from the next less stringent option, or the baseline if there

is no less stringent option (i.e., Baseline to Option 2a, Option 2a to Option 1, . . .). Regulatory options are ranked by increasing levels of toxicweighted removals. Cost effectiveness-values are calculated in 1981 dollars to permit consistent comparison of cost-effectiveness values among

regulations promulgated at different times.

Source: U.S. Environmental Protection Agency.

Stepping beyond Option 1a to Option

2 is clearly not cost effective for existing

indirect dischargers in comparison to

values calculated for previous

regulations. Stepping from Option 1a to

Option 2 yields very little additional

toxic-weighted pollutant removals, 600

pounds-equivalent, at an additional

estimated cost of $4.9 million. Because

the increase in removals is so small, the

cost-effectiveness value for moving from

Option 1a to Option 2 is extremely high

at $8,537 per pound-equivalent of

additional pollutant removed. The only

difference between Option 1a and

Option 2 is that Option 2 applies the

mass-based limitations of Option 2 to

low-flow indirect dischargers while

Option 1a applies the somewhat less

stringent, concentration-based

limitations of Option 1 to these

facilities. Thus, the high costeffectiveness value of $8,537 stems

entirely from the increased stringency of

regulatory requirements for these lowflow indirect discharging facilities and

demonstrates the poor cost effectiveness

of applying the Option 2 requirements

to this class of facilities. As noted in

Section XIV.C, above, the finding of

such a high cost-effectiveness value for

Option 2 for low-flow indirect

discharging facilities was an important

factor in EPA’s decision to define and

evaluate alternatives to Option 2 for

these facilities in developing the PSES

regulatory proposal.

Moving from Option 2 to Option 3

was also found to yield a high costeffectiveness value. Although the

incremental removals for this step are

relatively substantial at 93,800 poundsequivalent, the large increase in cost of

$337.4 million yields a costeffectiveness value of $3,596 per poundequivalent of additional pollutant

removed, thus rendering this option

unacceptable from the standpoint of

cost effectiveness.

On the basis of this analysis, EPA

determined that the proposed option,

Option 2a, is cost effective. The costeffectiveness analysis supports the

choice of Option 2a as the proposed

PSES regulatory option for indirect

dischargers.

2. Cost-Effectiveness Analysis for Direct

Dischargers

Table 20 summarizes the costeffectiveness analysis for the BPT/BAT

regulatory options applicable to direct

dischargers. As before, annual

compliance costs are shown in 1994

dollars and also in 1981 dollars; and

pollutant removals are reported on both

an unweighted and toxic-weighted

basis. The regulatory options are listed

in order of increasing stringency on the

basis of estimated toxic-weighted

pollutant removals. The ranking of

annual compliance costs matches the

ranking of option stringency.

As shown in Table 20, Option 1 is

estimated to achieve approximately 1.2

million pounds of toxic pollutant

removals on an unweighted basis and

58,200 pounds-equivalent on a toxicweighted basis. With an estimated

annual compliance cost of $11.9 million

($1981), the calculated cost

effectiveness for Option 1—s removals

is $204 per pound-equivalent of

pollutant removed. In moving from

Option 1 to Option 2, toxic-weighted

pollutant removals increase by 12,500

pounds-equivalent at a cost increase of

$0.6 million. Thus, the cost

effectiveness of stepping to Option 2 is

a comparatively low $50 per poundequivalent of additional pollutant

removed. EPA considers both of these

cost-effectiveness values to be

acceptable in relation to the values

calculated for previous regulations.
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28255

TABLE 20.—COST EFFECTIVENESS OF REGULATORY OPTIONS FOR THE METAL PRODUCTS AND MACHINERY INDUSTRY

[Direct Dischargers (BPT/BAT)]

Regulatory option

Annual compliance costs Unweighted

pollutant removals (000,

lbs)

Weighted pollutant removals Incremental

cost

($000,000,

1981)

Cost effectiveness ($/lb-eq,

$1981) ($000,000,

1994)

($000,000,

1981) (000, lbs-eq) Incremental(000, lbs-eq)

Option 1 ........................ 18.2 11.9 1,152.5 58.2 58.2 11.9 204

Option 2 ........................ 19.1 12.5 1,232.2 70.7 12.5 0.6 50

Option 3 ........................ 80.5 52.6 1,446.7 133.6 62.9 40.1 638

The cost effectiveness for a regulatory option is defined as the incremental cost per incremental removal in toxic pounds equivalent ($/lb-eq)

for that option. The ‘‘increment’’ for a given option is the change in costs or removals from the next less stringent option, or the baseline if there

is no less stringent option (i.e., Baseline to Option 1, Option 1 to Option 2, . . .). Regulatory options are ranked by increasing levels of toxicweighted removals. Cost effectiveness-values are calculated in 1981 dollars to permit consistent comparison of cost-effectiveness values among

regulations promulgated at different times.

Source: U.S. Environmental Protection Agency.

Option 3’s cost effectiveness of $638

per pound-equivalent of additional

pollutant removed is substantially

poorer than the cost effectiveness of

Options 1 and 2. Stepping from Option

2 to Option 3 nearly doubles the total

toxic-weighted removals with a

substantial increase of 62,900 poundsequivalent. However, Option 3’s annual

compliance costs are more than four

times those estimated for Option 2 and

the resulting additional cost of $40.1

million yields the relatively high costeffectiveness value of $638 per poundequivalent.

From this analysis, EPA determined

that Option 2 is cost effective, and the

cost-effectiveness analysis supports the

choice of Option 2 as the proposed BPT/

BAT regulatory option for direct

dischargers.

EPA also performed the costeffectiveness analysis with an additional

set of weighting factors called Pollutant

Weighting Factors, which are a

modification of the Toxic Weighting

Factors on which the preceding analyses

are based. Pollutant Weighting Factors

are not related to a benchmark pollutant

(i.e., copper) and normalize toxicity on

a different scale. This additional

analysis can be found in Appendix A of

the Cost Effectiveness Report.

XV. Executive Order 12866

A. Introduction

Under Executive Order 12866 [58

Federal Register 51, 735 (October 4,

1993)], the Agency must determine

whether the regulatory action is

‘‘significant’’ and therefore subject to

OMB review and the requirements of

the Executive Order. The Order defines

‘‘significant regulatory action’’ as one

that is likely to result in a rule that may:

(1) 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;

(2) create a serious inconsistency or

otherwise interfere with an action taken

or planned by another agency;

(3) materially alter the budgetary

impact of entitlements, grants, user fees,

or loan programs or the rights and

obligations or recipients thereof; or

(4) 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, EPA has determined that

this rule is a ‘‘significant regulatory

action’’ because it is expected to impose

an annual cost on the economy

exceeding $100 million. 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.

Because of the finding that the MP&M

regulation is a ‘‘significant regulatory

action’’ within the meaning of Executive

Order 12866, the Agency has prepared

a Regulatory Impact Assessment (RIA)

for the proposed regulatory alternative.

The RIA responds to the requirements

in Executive Order 12866 to assess both

the benefits and costs to society of

significant regulatory actions. The RIA

is detailed in, ‘‘Regulatory Impact

Assessment of Proposed Effluent

Guidelines for the Metal Products and

Machinery Industry, Phase I,’’ (see

Section II. for availability of this and

other supporting documents).

1. Overview of Benefits Analyzed

The RIA assesses the benefits of

proposed regulations to reduce effluent

discharges in the MP&M industry. Three

broad classes of benefits are considered:

human health, ecological, and economic

productivity benefits. Each class is

comprised of a number of more

narrowly defined benefits categories.

EPA expects that benefits will accrue to

society in all of these categories.

Because of data limitations and

imperfect understanding of how society

values some of these benefit categories,

however, EPA was not able to analyze

all of these categories with the same

level of rigor. At the highest level of

analysis, EPA was able to quantify the

expected effects for some benefit

categories and attach monetary values to

them. Benefit categories for which EPA

developed dollar estimates include

reduction in cancer risk from fish

consumption, increased value of

recreational fishing opportunities, and

reduced costs of managing and

disposing of POTW sewage sludges. For

other benefit categories, EPA was able to

quantify expected effects but not able to

estimate monetary values for them.

Examples of these benefit categories

include change in the frequency with

which certain aquatic species are

exposed to lethal concentrations of

certain pollutants, and change in certain

human health risk indicators. Finally,

EPA was able to identify and

qualitatively describe certain benefit

effects but was not able to assess them

on either a quantitative or an economic

value basis. These benefit categories

include but are not limited to: enhanced

diversionary uses, improved aesthetic

quality of waters near discharge outfalls,

enhanced water-dependent recreation

other than fishing, and benefits to

wildlife and to threatened or

endangered species, option and

existence values, cultural values,

tourism benefits, and biodiversity

benefits. Table 21 summarizes the

benefit categories discussed above and

identifies those that were monetized,

those that were quantitatively assessed

(but not monetized), and those that are

expected to result from the regulation

but were neither quantitatively assessed

nor monetized.
28256 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

TABLE 21.—BENEFIT CATEGORIES ASSOCIATED WITH WATER QUALITY IMPROVEMENTS RESULTING FROM THE METAL

PRODUCTS AND MACHINERY EFFLUENT GUIDELINE

Benefit category Quantified and

monetized

Quantified and

nonmonetized

Nonquantified

and

nonmonetized

Human Health Benefits:

Reduced cancer risk due to consumption of chemically-contaminated fish ................... X

Reduced cancer risk due to ingestion of chemically-contaminated drinking water ........ X

Reduced systemic health hazards (e.g. reproductive, immunological, neurological, circulatory, or respiratory toxicity) from consumption of chemically-contaminated fish.X

Reduced systemic health hazards (e.g. reproductive, immunological, neurological, circulatory, or respiratory toxicity) due to ingestion of chemically-contaminated drinking

water.

X

Reduced cancer risk from exposure to unregulated contaminants in chemically-contaminated sewage sludge.X

Reduced systemic health hazards from exposure to unregulated contaminants in

chemically-contaminated sewage sludge.

X

Reduced health hazards from exposure to contaminants in waters used recreationally

(e.g., swimming and boating).

Ecological Benefits:

Enhanced recreational fishing ......................................................................................... X

Reduced risk to aquatic life ............................................................................................. X

Enhanced in-stream recreation such as swimming, boating, hunting, rafting, subsistence fishing.X

Improved water enhanced recreation such as hiking, picnicking, birdwatching, photography.X

Increased aesthetic benefits such as enhancement of adjoining site amenities (e.g.

residing, working, traveling, and owning property near the water).

X

Existence value ................................................................................................................ X

Option value ..................................................................................................................... X

Reduced risk to terrestrial wildlife including endangered species .................................. X

Protection of biodiversity .................................................................................................. X

Protection of cultural valuation ........................................................................................ X

Reduced non-point source nitrogen contamination of water if sewage sludge is used

as a substitute for chemical fertilizer on agricultural land.

X

Satisfaction of a public preference for beneficial use of sewage sludge* ...................... X

Economic Productivity Benefits:

Reduced sewage sludge disposal costs ......................................................................... X

Enhanced tourism ............................................................................................................ X

Improved commercial fisheries yields .............................................................................. X

Addition of fertilizer to crops (nitrogen content of sewage sludge is available as a fertilizer when sludge is land applied)*.X

Improved crop yield (the organic matter in land-applied sewage sludge increases

soil’s water retention)*.

X

Reduced management practice and recordkeeping costs for appliers of sewage

sludge meeting exceptional quality criteria.

X

Reduced management and disposal costs for ‘‘cleaner’’ sewage sludge that does not

meet land application criteria.

X

Avoidance of costly siting processes for more controversial sewage sludge disposal

methods (e.g., incinerators) because of greater use of land application.

X

Reduced water treatment costs for municipal drinking water, irrigation water, and industrial process and cooling water.X

*Some double counting between this benefit category and ‘‘reduced sewage sludge disposal costs’’ is present.

The monetary assessment of benefits

is inevitably incomplete. As mentioned

above, monetary values were estimated

for only a few of the likely benefit

categories. In addition, because of data

and measurement limitations, some of

the available valuation measures do not

fully account for all of the mechanisms

by which society is likely to value a

given benefit event. As a result, the

estimated dollar values that are attached

to certain of the estimated benefit events

may understate society’s willingness-topay to achieve those benefit events. For

example, reduced sewage sludge

disposal costs may understate society’s

willingness-to-pay for less polluted

sewage sludge because public

preferences as revealed through political

decision-making processes indicate that

some communities would be willing to

pay for beneficial sewage sludge use

(land application) even when it is more

costly than other disposal options. As a

result, the estimate of the dollar value

of benefits to society is a partial,

noncomprehensive estimate and, in all

likelihood, understates the economic

benefits that will accrue from the

proposed regulation.

2. Overview of Costs Analyzed

The RIA compares EPA’s best

estimate of the monetized benefits of the

proposed MP&M regulation to the

estimated costs to society for achieving

those benefits. To assess the economic

costs to society of the MP&M regulation,

EPA relied foremost on the estimated

costs to MP&M facilities for the labor,

equipment, material, and other

economic resources needed to meet the

discharge limitations specified by the

proposed regulation. These cost

estimates are the same as those used for

the zero-cost-pass-through analysis of
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28257

9 Individuals with health insurance, however,

would not include the part of medical care cost

covered by insurance in their willingness-to-pay to

avoid adverse health effects.

facility impacts described in Section

XIV of this document (i.e., in which

firms must absorb all of the regulatory

compliance costs). In the societal costbenefit analysis, however, accounting

for these costs differs from that in the

facility impact analysis. In the facility

impact analysis, costs and their impacts

are considered in terms of their effects

on the financial performance of the

firms and facilities affected by

regulation. To understand the

significance of those costs to affected

firms and facilities and their likely

responses to the proposed regulation,

the analyses explicitly considered the

expected tax treatment of the annual

expenses and capital outlays for

compliance. In addition, the annual

charges for the capital outlays were

calculated using private costs of capital.

Thus, the total annual compliance costs

reported earlier in this document are the

costs to industry and are presented on

an after-tax basis reflecting private costs

of capital. In the analysis of the costs to

society, however, these compliance

costs are considered on a before-tax

basis and the annualization of capital

outlays is based on an opportunity cost

of capital to society. In general, because

of the elimination of tax considerations,

the estimated compliance costs are

greater from the perspective of society

than from the perspective of private

industry.

In addition to the estimated resource

costs to society of regulatory

compliance, the estimate of social cost

used in this analysis includes two other

cost elements: the cost to governments

(federal, state, and local) of

administering the permitting and

compliance monitoring activities under

the proposed regulation (as discussed

above at Section XIV.C.1); and the costs

associated with unemployment that may

result from the proposed regulation. The

unemployment-related costs include:

the cost of administering unemployment

programs for workers who are estimated

to lose employment (but not the cost of

unemployment benefits, which are a

transfer payment within society); and an

estimate of the amount that workers

would be willing to pay to avoid

involuntary unemployment. In much

the same way that society may value the

benefits of avoided adverse health

effects stemming from the regulation on

the basis of willingness-to-pay, society

may also value the incurrence of

unemployment as a cost of the

regulation using the same willingnessto-pay principle of valuation.

3. Organization of Following Discussion

The following sections of this

preamble discuss the estimated benefits

and costs to society of the proposed

MP&M regulation. The next section,

Section B, describes the broad categories

of benefits associated with the MP&M

rule as well as the estimation of these

benefits while Section C summarizes the

estimated costs. Section D summarizes

the comparison of estimated national

benefits and costs for the proposed

regulation.

B. Benefits Associated With the

Proposed Effluent Guidelines

MP&M industry effluents contain

priority and non-conventional metals,

organics and conventional pollutants.

Discharge of these pollutants into

freshwater, estuarine, and marine

ecosystems may alter aquatic habitats,

affect aquatic life and terrestrial

wildlife, and adversely affect human

health. Many of these pollutants are

human carcinogens, human systemic

toxicants, aquatic life toxicants, or all of

the above. In addition, many of these

pollutants persist in the environment,

resist biodegradation, and

bioaccumulate in aquatic organisms.

The Agency’s analysis of these

environmental and human health risk

concerns and of the water-related

benefits resulting from the proposed

effluent guidelines is contained in the

‘‘Environmental Assessment of the

Metal Products and Machinery Industry

(Phase I)’’, hereafter called the

Environmental Assessment (see Section

II. for availability of this document).

This assessment qualitatively and

quantitatively evaluates the potential

human health benefits and water quality

benefits of controlling the discharges of

66 pollutants from the MP&M industry

group. (see the Environmental

Assessment and the RIA for a discussion

of the pollutants).

In this analysis, benefits were

assessed by identifying the various ways

in which the reduction in discharges

from the MP&M industry would be

expected to provide benefits.

Regulations that improve water quality

will generally provide benefits in

several broad categories, which are

summarized below. Please refer to Table

21 for a list of the different types of

benefits that fall under each category.

Human health benefits. Reduced

pollutant discharges to the nation’s

waterways will generate human health

benefits by a number of mechanisms.

The most important and readily

analyzed of the human health benefits

stem from reduced risk of illness

associated with the consumption of

water, fish or other food that is taken

from waterways affected by effluent

discharges. Human health benefits are

typically analyzed by estimating the

change in the expected number of

adverse human health events in the

exposed population resulting from a

reduction in effluent discharges. While

some health effect mechanisms such as

cancer are relatively well understood

and thus may be quantified in a benefits

analysis, others are less well understood

and may not be assessed with the same

rigor or at all. For example, this analysis

quantitatively examines only two health

effect categories: incidence of cancer

and a composite indicator of systemic,

non-cancer health risk. However, in this

analysis, only incidence of cancer is

translated into an expected number of

avoided adverse health events (i.e.,

avoided cancer cases) and, on that basis,

monetized. Dose-response relationships

are not available for other health events

that might also be avoided by reduced

pollutant exposures. The economic

valuation of these health effect events is

generally based on estimates of the

monetary value that society is willing to

pay for their avoidance. Such

‘‘willingness-to-pay’’ valuations are

generally considered to provide a fairly

comprehensive measure of society’s

valuation of the health-related benefit in

that they account for such factors as the

costs of health care,9 loss in income, and

pain and suffering (both among affected

individuals and family and friends). In

some cases, less comprehensive

valuations are used that are based only

on the estimated costs of health care,

remedial treatments, or forgone income.

Ecological benefits. Ecological

benefits stem from improvements in

habitats or ecosystems that are affected

by effluent discharges. For example,

spawning grounds for important

recreationally or commercially caught

fish species may be restored in response

to a reduction in MP&M effluent

discharges. It is frequently quite

difficult, however, to quantify and

attach economic values to benefit

categories that are referred to as

ecological benefits. The difficulty in

quantifying benefit categories results

from imperfect understanding of the

relationship between changes in effluent

discharges and the benefit events. In

addition, it is often difficult to attach

monetary values to these benefit

categories because the benefit events do

not occur in markets in which prices or

costs are readily observed. Ecological

benefits may be loosely classified as

non-market, use benefits, and nonmarket, non-use benefits.
28258 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

10Even some so-called non-consumptive uses

may temporarily deplete the natural resource or

reduce the potential value to other users. For

example, over-use of the habitat or crowding in

such pursuits as bird-watching may diminish the

value of the natural resource to other users.

Non-market, use benefits stem from

improvements in ecosystems and

habitats that, in turn, lead to enhanced

human use and enjoyment of the

affected areas. For example, reduced

discharges may lead to increased

recreational use and enjoyment of

affected waterways in such activities as

fishing, swimming, boating, hunting or

birdwatching. Such uses can be

classified as either consumptive or nonconsumptive. Consumptive uses can be

distinguished from non-consumptive

uses in that the former excludes other

uses of the same resource. For example,

if recreational anglers consume their

fish catch, the stock of the natural

resource is at least temporarily depleted.

With non-consumptive uses, however,

the resource base generally remains in

the same state before and after use (e.g.,

birdwatching).10

In some cases, it may be possible to

quantify and attach partial economic

values to such benefit events on the

basis of market values (e.g., an increase

in tourism activity associated with

improved recreational fishing

opportunities); in this case, these benefit

events might better be classified as

economic productivity related events as

explained in the next section. These

events, however, are often not able to be

fully valued using information from

economic markets. In this case, they are

more appropriately classified as nonmarket use ecological benefits since

economic markets will only capture

related expenditures made by

recreational users such as food and

lodging and will not capture the value

placed on the experience itself.

The second broad class of ecological

benefits, non-market, non-use benefits,

includes benefit events that are not

associated with current use of the

affected ecosystem or habitat but arise

from the realization of the improvement

in the affected ecosystem or habitat

resulting from reduced effluent

discharges. This class of benefits also

includes the value that individuals

place on the potential for use sometime

in the future either by themselves or

future generations. As an example of the

former, people may attach a value to

protecting habitats and species that are

otherwise detrimentally affected by

effluent discharges even when they do

not use or anticipate future use of the

affected waterways for recreational or

other purposes. The latter can be

described as a combination of insurance

and speculative value which reflects

individuals’ wish to protect the option

to use and enjoy a resource at some later

date. From an ecosystem standpoint,

pristine habitats and wildlife refuges are

often preserved under the assumption

that plant or animal species that may

yield pharmaceutical, genetic, or

ecosystem benefits yet to be discovered.

These benefits may also manifest by

other valuation mechanisms, such as:

cultural valuation, philanthropy, and

bequest valuation. It is often extremely

difficult or even impossible to quantify

the relationship between changes in

discharges and the improvements in

societal well-being associated with such

valuation mechanisms. That these

valuation mechanisms exist, however, is

indisputable as evidenced, for example,

by society’s willingness to contribute to

organizations whose mission is to

purchase and preserve lands or habitats

for the sole purpose of averting

development.

Economic productivity benefits.

Reduced pollutant discharges may also

generate benefits through improvements

in economic productivity. For example,

economic productivity gains may occur

through reduced costs to public sewage

systems (publicly owned treatment

works or POTWs) for managing and

disposing of the sewage sludge that

results from treatment of effluent

discharges. With less pollutant

contamination of industry’s discharges

to POTWs, the POTWs in turn incur

lower costs in managing and disposing

of their treatment residuals. Similarly,

economic productivity may be

enhanced due to reduced treatment

costs associated with irrigation water,

industrial cooling water and municipal

drinking water supplies. Other

economic productivity gains may result

from improved tourism opportunities in

areas that are affected by effluent

discharges. In addition, ecological

benefits such as improved species

survival will be translated into

economic productivity benefits such as

increases in commercially caught fish

populations and yield. When such

economic productivity effects can be

identified and quantified, they are

generally straightforward to value

because they often involve market-place

events for which prices or unit costs are

readily available.

As indicated above, some of these

improvements reduce societal costs. As

such, these improvements (i.e. reduced

treatment and disposal costs) could be

described as a reduced cost and be

included in the economic cost analysis

rather than in the benefits analysis. For

this analysis, they are treated as a

benefit of the effluent guideline.

1. Qualitative Description of the

Benefits

Benefits to human health associated

with the proposed rule include

reductions in cancer risk and systemic

health problems (e.g. reproductive,

immunological, neurological,

circulatory, or respiratory toxicity) that

are caused by consuming chemicallycontaminated fish and ingesting

chemically-contaminated drinking

water. With respect to fish

consumption, benefits will accrue to

recreational and subsistence fishermen

and to their families. In addition,

populations served by drinking water

intakes located on river reaches to

which MP&M facilities discharge will

benefit from reduced pollutant

concentrations in MP&M wastewater

discharges.

Benefits to aquatic life include

reduction of priority and nonconventional metals, organics, and

conventional pollutants to levels below

those considered to negatively affect

receiving water’s biota. Such impacts

include acute and chronic toxicity,

sublethal effects on metabolic and

reproductive functions, physical

destruction of spawning and feeding

habitats, and loss of prey organisms.

Chemical contamination of aquatic biota

may also directly or indirectly impact

local terrestrial wildlife. Reductions in

such impacts will enhance recreational

fishing opportunities in terms of both

the quality and abundance of species

caught. As a result, more persons may

fish a given area and the value of their

fishing experience may increase on a

per fishing event basis.

Benefits from changes in sewage

sludge disposal practices will be

realized as publicly owned treatment

works (POTWs) are able to dispose of

cleaner (i.e. less toxic) sewage sludge by

less expensive and more

environmentally beneficial methods.

For example, cleaner sewage sludge may

be applied to agricultural land rather

than being incinerated or disposed of in

landfills and other land sites. In

addition to the direct cost savings that

may accrue to POTWS, when sewage

sludge is beneficially applied to land, its

nitrogen content is available as a

valuable fertilizer. In addition, the

organic matter in sludge will generally

improve the soil structure for plant

growth and increase the ability of soil to

retain water. As a result, land

application of sewage sludge may yield

benefits in terms of overall

improvements in soil quality and crop

yields. Benefits may also accrue through

greater flexibility in managing and

disposing of POTW sewage sludges and
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28259

shifts into beneficial reuse of sewage

sludge even when the reduction in

sludge contamination levels does not

yield direct cost savings to POTWs.

These latter components of economic

benefits from less contamination of

POTW sewage sludges are not addressed

in this analysis.

2. Quantitative Estimate of Benefits

EPA quantified and monetized human

health, aquatic life, recreational fishing,

and sewage sludge disposal benefits

using a site-specific analysis for baseline

conditions and for the conditions that

are expected to be achieved by BAT/

PSES process changes. Quantified but

not monetized benefits include

reductions in excursions of health-based

water quality toxic effects levels and

aquatic life criteria as well as reductions

in the frequency with which certain

aquatic species are exposed to lethal

concentrations of MP&M pollutants. It

should be noted that the benefit

categories that were able to be

quantified and monetized in this

analysis represent only a few of the

benefits that are likely to be achieved by

the proposed regulation (see Table 21).Q

Quantified human health benefits are

estimated by:

• Estimating the potential reduction

of carcinogenic risk and systemic

hazards from fish consumption;

• Estimating the potential reduction

of carcinogenic risk and systemic

hazards from ingestion of drinking

water; and

• Comparing estimated in-stream

concentrations to health-based water

quality toxic effect levels.

Quantified aquatic life benefits are

estimated by:

• Comparing modeled in-stream

concentrations to aquatic life water

quality criteria or toxic effect values

(AWQCs); and

• Comparing in-stream

concentrations to estimated lethal

threshold concentrations for selected

aquatic species.

Quantified recreational fishing

benefits are calculated on the basis of

the estimated increase in the value per

person-day of fishing in a waterbody

from which all MP&M AWQC

excursions are eliminated. Sewage

sludge disposal benefits are calculated

on the basis of the incremental quantity

of sludge that, as a result of reduced

pollutant discharges to POTWs, meets

criteria for the generally less expensive

disposal methods, namely land

application and surface disposal. The

methodologies used in these analyses,

including all assumptions and

limitations, are explained in the

Regulatory Impact Analysis.

a. Cancer Risk and Systemic Hazards

and Benefits

Aggregate cancer risk, and systemic

hazards from drinking contaminated

water were estimated for populations

served by drinking water intakes on

waterbodies to which MP&M facilities

discharge. In-stream concentrations of 4

carcinogenic and 33 systemic toxicants

were estimated for 396 facilities

discharging directly or indirectly to 326

receiving waterways using a model of

the instream pollutant mixing and

dilution process. In-stream

concentrations were estimated for the

initial discharge reach and for

downstream reaches taking into account

the various mechanisms by which

pollution concentrations diminish

below the initial point of discharge (e.g.,

dilution, adsorption, volatilization, and

hydrolysis). The calculated in-stream

concentrations were used to estimate

the change in cancer risk and systemic

hazards resulting from the proposed and

alternative MP&M regulatory options for

populations served by drinking water

intakes.

In addition, aggregate cancer risk and

systemic hazards from consuming

contaminated fish were estimated for

recreational and subsistence anglers and

their families. This analysis relied on

the same estimates of instream pollutant

concentrations as used for the drinking

water health effects analysis. Pollutant

contamination of fish flesh was

estimated using biological uptake

factors. Data on licensed fishing

population by state and county,

presence of fish advisories, fishing

activity rates, and average household

size were used to estimate the

population of recreational and

subsistence anglers and their families

that would benefit from reduced

contamination of fish. Fish

consumption rates for recreational and

subsistence anglers were used to

estimate the change in cancer risk and

systemic hazards among these

populations.

For combined recreational and

subsistence angler populations, the

proposed BAT and PSES options are

projected to eliminate approximately 2.7

cancer cases per year from a baseline of

about 11.1 cases estimated at the current

discharge level, representing a reduction

of about 25 percent. For the drinking

water population, EPA estimated that

reduced pollutant discharges under the

proposed BAT and PSES options would

reduce cancer risk by approximately 3.0

cancer cases per year. However, EPA

has published drinking water criteria for

all of the chemicals for which these

avoided cancer cases were estimated. As

a result, these avoided cancer cases

were excluded from the benefits

evaluation because it is assumed that

public drinking water treatment systems

will remove these pollutants from the

public water supply.

In addition to the estimated changes

in cancer risk in exposed populations,

EPA also estimated the change in an

indicator of systemic, non-cancer risk of

illness. This composite risk indicator, or

systemic hazard score, which is based

on the change in exposure to pollutants

through fish and water consumption

relative to pollutant-specific health

effects thresholds, yields an additional

measure of the human health benefits

that are likely to result from the

proposed regulation. Specifically, the

systemic hazard score is calculated as

the sum of the ratios of quantities of

pollutants ingested into the human body

relative to the daily reference dose for

each pollutant. Values above or near one

are highly suggestive of a risk of

systemic health hazard. The hazard

score assumes that the combined effect

of ingesting multiple pollutants is

proportional to the sum of their effects

individually.

The distribution of hazard scores was

calculated for drinking water and fish

consumption populations on the basis

of baseline and post-compliance

exposures. For each exposed population

category, the change in the distribution

from baseline to the post-compliance

case provides a measure of the reduced

risk of systemic health hazard from

reduced MP&M industry discharges.

Analytic tractability issues prevented

this analysis from being able to be done

on a sample-weighted basis. The results

are for sample discharge locations only.

The results for both the fish and

drinking water analysis show movement

in populations from higher risk values

to lower risk values. In addition, both

analyses show substantial increments in

the percentage of exposed population

that would be exposed to no risk of

systemic health hazard associated with

discharges by MP&M facilities.

b. Excursions of Health-Based Water

Quality Toxic Effect Levels

In addition to the estimated changes

in cancer and systemic risk in exposed

populations, EPA also estimated the

effect of facility discharges of regulated

pollutants on pollutant concentrations

in affected waterways relative to

ambient water criteria for protection of

human health. The estimated

concentrations were compared, on both

a baseline and post-compliance basis,

with EPA ambient water quality criteria

(AWQCs) for protection of human

health through consumption of
28260 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

11The term ‘‘directly affected’’ is used here to

reflect impacts from direct exposure to a pollutant,

rather than ‘‘indirect’’ effects such as those that

occur due to the loss of important predator or prey

species.

organisms and consumption of

organisms and water. Pollutant

concentrations in excess of these values

indicate potential risks to human health.

EPA modeling results show that 137

reaches exceed AWQC values at

baseline discharge levels. Proposed BAT

and PSES options are projected to

eliminate concentrations in excess of

the criteria on 40 of these reaches,

leaving an estimated 97 reaches with

concentrations in excess of AWQC

values for protection of human health.

The analyses pertaining to change in

human health risk described in this and

the preceding section ignore the

potential for joint effects of more than

one pollutant. Each pollutant is dealt

with in isolation and the individually

estimated effects are added together.

The analyses do not account for the

possibility that several pollutants may

combine in a synergistic fashion to yield

more adverse effects to human health

than indicated by the simple sum of the

individual effects.

c. Aquatic Life Benefits

To assess aquatic life benefits, EPA

estimated the effect of facility

discharges of regulated pollutants on

pollutant concentrations in affected

waterways. The estimated

concentrations were compared, on both

a baseline and post-compliance basis,

with EPA ambient water quality criteria

(AWQCs) for acute and chronic

exposure impacts to aquatic life.

Pollutant concentrations in excess of

these values indicate potential impacts

to aquatic life. EPA modeling results

show that 130 reaches exceed AWQC

values at baseline discharge levels.

Proposed BAT and PSES options are

projected to eliminate concentrations in

excess of the criteria on 88 of these

reaches, leaving an estimated 41 reaches

with concentrations in excess of AWQC

values for aquatic life.

EPA also analyzed aquatic life

benefits on the basis of the change in

frequency with which certain aquatic

species may be expected to be exposed

to lethal concentrations of pollutants

discharged by MP&M facilities. As such,

this analysis focuses solely on acute

(short-term) toxicity and does not

consider chronic (long-term) toxicity.

This analysis examined the effects of

specific pollutants on selected aquatic

species with a relatively wide range of

sensitivity to MP&M pollutants.

Specifically, thirteen MP&M pollutants

thought to be among those having the

greatest potential to cause risks to

aquatic life were analyzed. Species with

socioeconomic importance such as

trout, bass, and catfish were highlighted,

but all species for which data were

available, including those of less

socioeconomic importance, were

evaluated. This analysis uses a species

sensitivity distribution rather than a

single toxicity threshold concentration

in comparison to in-stream pollutant

concentrations for the following three

reasons:

1. Species sensitivity distributions,

which are used by EPA to set water

quality criteria, can be used to relate

exposure concentrations to the

proportion of species whose

toxicological effect concentrations (e.g.,

LC50 , the lethal concentration for fifty

percent of a species, or some lower

lethal threshold such as an LC10 or LC1)

are exceeded. This proportion provides

an indication of the percentage of

aquatic species that would be directly

affected 11 at the exposure

concentration. Unlike comparisons to

water quality criteria, which usually

yield ratios of the exposure

concentration to the criterion

concentration, the proportion of species

that are likely to be directly affected

provides a more intuitive indicator of

ecological risk. It should be noted,

however, that both indicators of

ecological risk (water quality criteria

and proportion of species impacted)

suffer from the inability to account for

indirect impacts on aquatic ecosystems,

such as those that result from

interruption of predator-prey

relationships. Therefore, neither

approach should be considered to

provide absolute measures of ecological

risk.

2. The variation in chemical

sensitivity over a group of species is

known to vary among chemicals

(Erickson and Stephan, 1988). For

example, consider two chemicals both

of which are at lethal effect

concentrations for five percent of a

habitat’s species. A given percentage

increase (e.g., doubling) of both

pollutants’ concentrations will not

necessarily lead to the same increase in

the proportion of the species that are

exposed to lethal effect concentrations.

That is, doubling one chemical’s

concentration might increase the

proportion of species affected from five

percent to 25 percent while doubling

the other chemical’s concentration

might increase the proportion of species

affected from five percent to 50 percent.

This diversity of species’ response to

changes in concentrations of different

pollutants is better captured by use of

distributions of response over the group

of species in the habitat.

3. Because the identities of the tested

species comprising the species

sensitivity distributions are known, the

use of species sensitivity distributions

allowed EPA to identify which of the

tested species are at risk from exposure

to regulated pollutants and which are

likely to benefit from reduced

discharges.

Using species sensitivity

distributions, EPA estimated the

proportion of tested species whose

lethal threshold concentrations would

be exceeded at various exposure

concentrations. In interpreting these

results, EPA assumed that a greater

proportion of species affected signifies a

greater risk of lethal effects in the

population of species present in a

habitat. This analysis found that the

proposed regulation will yield

significant reductions in the expected

frequency with which certain aquatic

species may be exposed to lethal

concentrations of pollutants. The

reduced exposure translates into

benefits such as increased species

diversity and abundance which would,

in turn, enhance recreational and

commercial fishing opportunities (see

the RIA for additional discussion of this

analysis and its findings in terms of

benefits to specific species).

d. Recreational Fishing Benefits

As described above, the proposed

BAT and PSES options will reduce the

number of excursions of aquatic life

criteria or toxic effect values. EPA

assumes that elimination of criteria

excursions for all regulated pollutants in

a waterbody will achieve water quality

that is protective of aquatic life. This

improvement in water quality, in turn,

generates benefits to recreational anglers

by increasing the value of their

experience or the number of days they

subsequently choose to fish the

waterbody. These benefits, however, do

not include all of the benefits that are

associated with improvements in

aquatic life. For example, recreational

benefits do not capture the benefit of

increased assimilative capacity of a

receiving waterbody, improvements in

the taste and odor of the instream flow,

or improvements to other recreational

activities such as swimming and

wildlife observation that may be

enhanced by improved water quality.

Modeling results show that, under the

proposed regulatory option, criteria

excursions for all pollutants whose

discharges are affected by the MP&M

regulation are eliminated in 123

discharge locations.
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28261

12 Industrial sludge’’ which results from the

operation of treatment systems at MP&M facilities,

will increase both in quantity and in level of

contamination as a result of the proposed

regulation. The cost of managing and disposing of

this industrial sludge is included in the estimated

costs of regulatory compliance used in the

economic and regulatory impact analyses.

e. Avoided Sewage Sludge Disposal

Costs

To estimate the quantity of sewage

sludge that will be disposed of using a

less expensive method due to the

proposed regulatory requirements, EPA

calculated baseline and post-compliance

sewage sludge quality and compared

sewage sludge pollutant concentrations

to criteria for land application and

surface disposal.12 POTWs are assumed

to choose the least expensive sewage

sludge use or disposal option for which

the sludge meets pollutant criteria. For

many POTWs, the least expensive or

‘‘preferred’’ option is generally

agricultural application (a type of land

application) or surface disposal of

sewage sludge. As a result of the

proposed regulation, many POTWs are

expected to achieve substantial cost

savings by disposing of sewage sludge

through agricultural application or

surface disposal. For POTWs with

limited access to agricultural land and

surface disposal sites, the cost savings

resulting from sewage sludge with lower

pollutant concentrations are expected to

be less substantial. However, disposal of

sewage sludge that meets agricultural

application limits through distributing

and marketing methods may achieve

some cost savings for these facilities. In

the baseline, an estimated 5,559 of 6,950

POTWs meet criteria for surface

disposal or land application. Of the

5,559 POTWs meeting surface disposal

or land application criteria, 5,309 meet

the more stringent criteria for beneficial

land application while 250 meet only

the more lenient surface disposal

criteria. Under the proposed regulation,

the total of POTWs that are expected to

meet criteria for surface disposal or land

application increases to 5,743. Of this

total that meet criteria for surface

disposal or land application, 5,493

POTWs (or an increase of 184 POTWs)

are expected to meet criteria for

beneficial land application, while 250

POTWs continue to meet criteria for

surface disposal.

3. Monetization of Benefits

For this regulation, EPA estimated the

monetary value of benefits for three

benefit categories: human health

benefits from reduced exposure to

carcinogens in fish taken from

waterways affected by MP&M

discharges; enhanced recreational

fishing opportunities in waterways

affected by MP&M discharges; and

reduced costs to POTWs in managing

and disposing of sewage sludge that is

affected by MP&M discharges.

a. Valuation of Human Health Benefits

EPA estimated the value of a limited

set of possible human health benefits

from the human health risk assessment

discussed above. These benefits are

attributed to reductions in cancer risks

associated with consuming chemicallycontaminated fish. The valuation of

benefits is based on estimates of

society’s willingness-to-pay to avoid the

risk of cancer associated with

consuming chemically-contaminated

fish. Little data, however, is available

regarding both dose-response

relationships for non-cancer systemic

health outcomes and the monetary value

of avoiding such health outcomes. As a

result, it was not possible to monetize

the systemic health effects that might be

associated with exposures to pollutants

emanating from the MP&M industry

such as reproductive, immunological,

neurological, or circulatory problems.

To value mortality, EPA used a range

of values recommended by EPA’s Office

of Policy Analysis from a review of

studies quantifying individuals’

willingness to pay to avoid increased

risks to life (Fisher, Chestnut, and

Violette, 1989; and Violette and

Chestnut, 1986). The reviewed studies

used hedonic wage or contingent

valuation analyses in labor markets to

estimate the amounts that individuals

would be willing to pay to avoid slight

increases in risk of mortality (i.e., the

question analyzed in these studies is:

how much more must a worker be paid

to accept an occupation with a slightly

higher risk of mortality?). The

willingness-to-pay values estimated in

these studies are associated with small

changes in the probability of mortality;

to estimate a willingness-to-pay value

for avoiding certain or high probability

mortality events, they are extrapolated

to the value for a 100 percent

probability event. The resulting

estimates of the value of a ‘‘statistical

life saved’’ are used in analyses such as

this regulatory analysis to value

regulatory effects that are expected to

reduce the incidence of mortality. From

this review, the Office of Policy

Analysis recommended a range of $1.6

to $8.5 million (1986 dollars) for valuing

an avoided event of premature mortality

or a statistical life saved. For this

analysis, EPA adjusted the

recommended figures to 1994 using the

relative change in nominal Gross

Domestic Product from 1986 to 1994

(57.2 percent) to account for increases in

society’s willingness to pay to avoid risk

of mortality as national income

increases. Updating to 1994 yields a

range of $2.5 to $13.4 million. For this

analysis, the low-point of the range is

used as a ‘‘low’’ estimate while the top

of the range is used as a ‘‘high’’

estimate. For the proposed Option 2a/2,

the benefits associated with reduced

incidence of cancer from fish

consumption are estimated to range

from $6.8 million to $36.2 million per

year ($1994), depending on the choice

of willingness-to-pay value that is used

to value the avoided cancer events.

Although EPA estimated the change in

cancer risk resulting from reduced

exposure to MP&M pollutants via the

drinking water pathway, these effects

were not included in the monetary

estimate of benefits because EPA has

published drinking water criteria for the

four pollutants for which the cancer

analysis was completed. Thus, the total

estimated value for human health

benefits ranges from $6.8 million to

$36.2 million per year ($1994).

b. Valuation of Enhanced Recreational

Fishing Opportunities

EPA also estimated the value of

enhanced recreational fishing

opportunities. This valuation provides a

limited measure of the value to society

of improvements in aquatic habitats that

are used for recreational purposes. The

estimate of benefits is limited because it

focuses on only one mechanism,

enhanced recreational fishing, by which

society may value improved aquatic

habitats; it ignores other recreational

effects as well as valuation mechanisms

that are separate from recreation.

EPA calculated the value of enhanced

recreational fishing opportunities by

first estimating the baseline value of

those fisheries in which all instances in

which AWQCs are exceeded would be

eliminated. Second, EPA estimated the

value of improving the water quality in

these fisheries based on the incremental

value to anglers of eliminating all

contaminants from a fishery (Lyke,

1992). Estimates of the increase in value

of recreational fishing to anglers range

from $23.6 million to $84.3 million

annually ($1994).

c. Reduced Costs to POTWs in

Managing and Disposing of Sewage

Sludge

On the basis of the estimated reduced

contamination of sewage sludge, EPA

estimated that 184 POTWs will be able

to select the lower-cost land application

methods for sewage sludge disposal.

The cost savings associated with the

selection of lower cost sewage sludge

management and disposal methods are
28262 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

estimated to range from $39.1 to $86.0

million annually ($1994).

d. Total Estimated Value of Benefits

For the proposed regulatory option,

total benefits for the three categories for

which monetary estimates were possible

range from $69.6 to $206.5 million

annually. As noted above, this benefit

estimate is necessarily incomplete

because it omits numerous mechanisms

by which society is likely to benefit

from reduced effluent discharges from

the MP&M industry. Examples of benefit

categories not reflected in this estimate

include: non-cancer related health

benefits, other water dependent

recreational benefits, existence and

option values, and benefits to wildlife

and endangered species.

4. Limitations and Uncertainties

Associated With Estimating Benefits

The estimation of benefits is

inevitably incomplete in that only a

small set of the categories by which the

proposed regulation is expected to

generate benefits are able to be

quantified and monetized. Beyond this

broad and overriding limitation to the

assessment of benefits, the

methodologies used to assess the benefit

categories that were quantitatively

analyzed and for which monetary values

were estimated also involve significant

simplifications and uncertainties.

Whether these simplifications and

uncertainties are likely to lead to an

understatement or overstatement of the

estimated economic values for the

benefit categories that were analyzed is

uncertain. Several of these

simplifications and uncertainties are

noted below.

The methodology used to estimate

water quality criteria excursions

assumes that MP&M facilities are the

only source of each of the regulated

pollutants in the waterbody; the

methodology does not incorporate

background contributions either from

other upstream sources or, in the case of

water quality criteria, contaminated

sediments due to previous discharge

practices. Furthermore, although the

discharge of these contaminants may

cease or be minimized, sediment

contamination and subsequent

accumulation of the regulated pollutants

in aquatic organisms may continue for

years. Actual water quality

improvements, in terms of eliminating

excursions above criteria may, therefore,

be over- or under-estimated depending

on the relative magnitude of background

contributions of regulated pollutants.

In this analysis, the estimates of

human health and ecological benefits

are based on the estimated changes in

in-stream concentrations of regulated

pollutants. In-stream concentrations

under baseline conditions and under the

proposed option are modeled for all

waterbodies to which MP&M facilities

discharge. Certain data underlying these

analyses are site specific, including:

flow rates under average and low flow

conditions, and flow depth. However,

other basic assumptions in the model

are not site specific, including:

chemistry of the water body, mixing

processes, longitudinal dispersion, flow

geometry, suspension of solids and

reaction rates. Where these assumptions

differ from actual conditions, modeled

results will approximate in-stream

concentrations with varying degree of

accuracy. The effect of these

assumptions on benefit estimates,

however, is indeterminate.

In the analysis of benefits associated

with consumption of fish taken from

affected waterways, EPA estimated the

exposed population—that is, the

population expected to fish an affected

waterway—from county fishing license

and fishing activity data. Some data are

specific to the counties in which MP&M

sample facilities are located; however,

for some counties in which MP&M

facilities are located, it was necessary to

estimate fishing population and activity

rates from state-level data or from data

for nearby counties or states (see

Chapter 9 of the RIA for a detailed

description of this methodology). These

approaches are necessarily

approximations and may lead to an

over- or underestimates of the exposed

population. The effect of these

estimation procedures on the benefits

estimate, however, is not known.

A related issue involves the

assumption made regarding the number

of subsistence fishermen in the exposed

population. In this analysis, subsistence

fishermen are assumed to account for an

additional 5 percent of the fishing

population. The magnitude of

subsistence fishing in the United States

or in individual states, however, is not

known. As a result, this estimate may

understate or overstate the actual

number of subsistence fishermen.

Finally, recreational fishing benefits

are based on the assumption that anglers

place the same value on reducing

concentrations of MP&M pollutants to

levels considered protective of aquatic

life as they do on eliminating all

contaminants from a fishery. While the

former level of pollutant reduction is

assumed to be protective of aquatic life,

some level of contamination would still

exist in a fishery. As such, benefits of

recreational fishing may be overstated.

EPA acknowledges the unavoidable

uncertainty associated with estimating

benefits. EPA believes that it has used

the best methodology available for

estimating benefits. EPA is soliciting

comments on the reliability and

accuracy of the methods used and

suggestions on alternative methods

which could be used for the final rule

(see Section XIX).

C. Costs To Society

The social costs of regulatory actions

are the opportunity costs to society of

employing scarce resources in pollution

control activity. The social costs of

regulation include both monetary and

non-monetary outlays made by society.

Monetary outlays include private-sector

compliance costs, government

administrative costs, and other

adjustment costs, such as the cost of

relocating displaced workers. Nonmonetary outlays, some of which can be

assigned monetary values, include

losses in consumers’ and producers’

surpluses in affected product markets,

discomfort or inconvenience, loss of

time, and a slowdown in the rate of

innovation.

For this analysis, EPA based its

estimate of the cost to society on the

following components of social cost: the

cost of society’s economic resources for

achieving compliance with the

proposed regulatory option; the cost to

governments of administering the

proposed regulation; the cost of

administering unemployment programs

for job losses resulting from regulation;

and worker dislocation costs.

1. Resource Cost of Compliance

The chief component of the estimated

annual social cost is the cost of

complying with the proposed

regulation. The portion of this cost that

is expected to be borne directly by the

MP&M Phase I industries amounts to

$160.6 million ($1994). This amount is

the same as that used for the facility

impact analysis and reflects the cost of

pollution prevention and treatment

systems needed to achieve compliance

with the proposed discharge limitations

(see Section XIV. D. and E.). In addition,

this amount reflects the expected tax

treatment of capital outlays and annual

expenses and is also based on private

costs of capital. However, as discussed

in the introduction to this section, the

appropriate measure of cost of

compliance to society will omit these

tax effects and will also reflect the

opportunity cost of capital to society or

social discount rate. The combined

effect of these adjustments is to add an

estimated $29.7 million to the estimated

private industry cost of the regulation,

bringing the cost of compliance to

society to $190.3 million ($1994). This
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28263

amount may be interpreted as the value

of society’s productive resources—

including labor, equipment, and other

material—that is needed annually to

achieve the reductions in effluent

discharges specified by the proposed

regulatory option.

2. Cost of Administering the Proposed

Regulation

In addition to the resource costs for

achieving effluent discharge reductions,

EPA also estimated the cost to all levels

of governments for administering the

proposed regulation. The main

component of this administrative cost

category is the cost of labor and material

resources for writing permits under the

regulation and for compliance

monitoring and enforcement activities.

EPA estimates that these costs will

range from $2.1 to $3.4 million ($1994)

annually.

3. Cost of Unemployment

To account for the total social cost of

unemployment, EPA estimated the cost

of worker dislocation (exclusive of cash

benefits) to the individual as well as the

additional cost to governments to

administer unemployment benefits. The

cost of worker dislocation is estimated

based on incremental willingness-to-pay

to avoid job dislocation in a hedonic

wage framework. This framework has

been used in the past to impute a tradeoff between wages and job security

(Topel, 1984, Adams, 1985).

Specifically, this estimate approximates

a one-time willingness-to-pay to avoid

an involuntary episode of

unemployment and reflects all monetary

and non-monetary impacts of

involuntary unemployment incurred by

the worker. It does not include any

offsets to the cost of unemployment

such as unemployment compensation or

the value of increased leisure time.

For the MP&M industry, the implied

one time statistical cost of an

involuntary layoff is estimated at

$83,000 to $110,000 ($1994). To

calculate the annual cost of employment

displacement for the proposed

regulatory option, EPA annualized this

value over the 15-year analysis period at

a social opportunity cost of deferred

consumption of three percent and

multiplied the resulting annual value by

the total number of displaced workers

(698 FTEs) estimated in the facility

impact analysis. In the labor

requirements analysis (see Section

XIV.E, above), EPA estimated that the

demand for labor for compliance with

the proposed regulation would exceed

the estimated loss in employment from

facility closures. As a result, when the

total number of displaced workers is

adjusted to account for compliancerelated labor demand, the net loss in

employment is negative. For this

analysis, EPA considered a range of cost

for displaced workers with the high end

of the range based on the cost of worker

displacement considering only the job

losses in estimated facility closures and

with the low end of the range set at zero.

Setting the low end of the range at zero

recognizes that labor demands for

compliance may equal or exceed job

losses but, to be conservative, does not

enter a negative cost based on the

possible net reduction in

unemployment resulting from the

regulation. On this basis, EPA estimated

that annualized worker displacement

costs for the proposed regulation would

range from zero to $6.6 million.

Unemployment as the result of

regulation may also impose costs to

society through the additional

administrative burdens placed on the

unemployment system (the cost of

unemployment benefits per se is not a

social cost but instead a transfer

payment within society). Administrative

costs include the cost of processing

unemployment claims, retraining

workers, and placing workers in new

jobs. Using data from the Interstate

Conference of Employment Security

Agencies, EPA estimated that the per

unemployed worker cost of

administering unemployment programs

for job losses amounts to approximately

$100 per job loss. Multiplying this

figure by the 698 job losses and

annualizing the result over the 15-year

analysis period yields an annual

unemployment administration cost of

less than $10,000 per year. Again,

considering that the net employment

loss from the regulation may be

negative, EPA used a range of from zero

to $10,000 for the additional annual cost

of unemployment administration.

Summing across all social costs

results in a total social cost estimate of

$192.4 to $200.3 million annually

($1994). These social cost estimates do

not include losses in consumers’ and

producers’ surpluses resulting from the

change in quantity of goods and services

sold in affected product markets.

However, under the zero-cost-passthrough framework in which

compliance costs have been tallied,

MP&M industry product prices are

assumed not to increase as a result of

the proposed regulation. In this case, the

estimated resource costs of compliance

will approximate the loss in producers’

surplus and, with no increase in prices,

consumers’ surplus will not change.

D. Benefit-Cost Comparison

Because not all of the benefits

resulting from the proposed regulatory

alternative can be valued in dollar

terms, a complete cost-benefit

comparison cannot be performed. The

social cost of the proposed rule is

estimated at $192.4 to $200.3 million

annually ($1994). The sum total of

benefits that can be valued in dollar

terms ranges from $69.6 million to

$206.5 million annually ($1994).

As shown in Table 22, combining the

estimates of social benefits and social

costs yields a net monetizable benefit

ranging from negative $130.7 million to

positive $14.1 million annually. This

assessment of the relationship between

costs and benefits is subject to severe

limitations on the ability to estimate

comprehensively the expected benefits

of the proposed regulation. If all of the

benefits of regulation could be

quantified and monetized, EPA

estimates that in all likelihood the

benefits of regulation would exceed the

social costs.

TABLE 22.—COMPARISON OF NATIONAL ANNUAL MONETIZABLE BENEFITS TO COSTS FOR EFFLUENT LIMITATION

GUIDELINES AND STANDARDS FOR THE METAL PRODUCTS AND MACHINERY INDUSTRY, PHASE I

[Millions of 1994 dollars]

Benefit and cost categories Dollar value

Benefit Categories:

Human Health Benefits: Fish Consumption ......................................................................................................................... $6.8–$36.2

Human Health Benefits: Water Consumption ...................................................................................................................... 0.0–0.0

Recreational Fishing Benefits ............................................................................................................................................... 23.6–84.3

Avoided Sewage Sludge Disposal Costs ............................................................................................................................. 39.1–86.0

Total Estimated Benefits ............................................................................................................................................... 86.4–208.9

Cost Categories:
28264 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

TABLE 22.—COMPARISON OF NATIONAL ANNUAL MONETIZABLE BENEFITS TO COSTS FOR EFFLUENT LIMITATION

GUIDELINES AND STANDARDS FOR THE METAL PRODUCTS AND MACHINERY INDUSTRY, PHASE I—Continued

[Millions of 1994 dollars]

Benefit and cost categories Dollar value

Cost to Industry for the Proposed Regulatory Option .......................................................................................................... 160.6

Adjustments for Tax Code and Use of Social Discount Rate .............................................................................................. 29.7

Costs of Administering the Proposed Regulation ................................................................................................................ 2.1–3.4

Unemployment Administration and Worker Displacement Costs ........................................................................................ 0.0–6.6

Total Social Cost ........................................................................................................................................................... 192.4–200.3

Net Benefits (Benefits less Costs) ................................................................................................................................ *($130.7)–$14.1

* For calculating the range of net benefits, the low net benefit value is calculated by subtracting the high value of costs from the low value of

benefits. The high net benefit value is calculated by subtracting the low value of costs from the high value of benefits.

Source: U.S. Environmental Protection Agency.

XVI. Water Quality and Other

Environmental Benefits of Proposed

Rule for the Metal Products and

Machinery (MP&M) Industry

The U.S. Environmental Protection

Agency (EPA, Agency) evaluated the

environmental benefits of controlling

the discharges of toxic and

nonconventional pollutants from metal

products and machinery (MP&M)

facilities (Phase 1) to surface waters and

publicly-owned treatment works

(POTWs) in national analyses of direct

and indirect discharges. Discharges of

these pollutants into freshwater and

estuarine ecosystems may alter aquatic

habitats, adversely affect aquatic biota,

and adversely impact human health

through the consumption of

contaminated fish and water.

Furthermore, these pollutants may also

interfere with POTW operations in

terms of inhibition of activated sludge

or biological treatment and

contamination of sludges, thereby

limiting the method of disposal. Many

of these pollutants have at least one

toxic effect (human health carcinogen

and/or systemic toxicant or aquatic

toxicant). In addition, many of these

pollutants bioaccumulate in aquatic

organisms and persist in the

environment. Various studies

demonstrate the environmental impact

of discharges from MP&M facilities on

aquatic life, human health, and the

quality of receiving waters and

sediments. The National Sediment

Contaminant Point Source Inventory

ranks MP&M as one of the largest

ongoing sources of potentially toxic

pollutants to sediment (nearly 10

percent of the total load of potential

sediment contaminants from point

sources). Forty-six (46) direct MP&M

facilities are identified by States as

being point sources causing water

quality problems and are included on

their 304(l) Short List. Cases of human

health impacts (production worker

exposure); aquatic life impacts (lethal

and sublethal); a State fish consumption

advisory; and contamination of surface

waters, ground water, and sediments are

also documented.

EPA evaluated the effects of direct

wastewater discharges on receiving

stream water quality at current levels of

treatment and at proposed BAT

treatment levels. EPA predicted steadystate in-stream pollutant concentrations

after complete immediate mixing with

no loss from the system, and compared

these levels to EPA-published water

quality criteria or to documented toxic

effect levels for those chemicals for

which EPA has not published water

quality criteria. EPA performed this

analysis for a representative sample set

of 55 direct facilities discharging 61

pollutants to 55 receiving streams. This

set of 55 facilities includes 12 facilities

that currently are both direct and

indirect dischargers, but are projected to

become solely indirect dischargers at

the proposed option. However, the set of

55 facilities excludes four facilities that

EPA’s cost model predicts to close based

on current economic conditions. EPA

then extrapolated the results of this

analysis to the entire population of

direct MP&M facilities nationwide

(approximately 2,035 facilities

discharging to 2,035 receiving streams)

with each sample facility representing a

varying number of additional facilities

of the same approximate size engaged in

similar activities under similar

economic conditions.

In-stream concentrations for two

pollutants are projected to exceed

human health criteria (developed for

consumption of water and organisms) in

6 percent of the receiving streams

nationwide at current discharge levels.

The proposed BAT regulated discharge

levels will reduce the excursions of

human health criteria to 2 percent of the

receiving streams. The percentage of

receiving streams nationwide with instream pollutant concentrations

projected to exceed chronic aquatic life

criteria or toxic effect levels will be

reduced from 9 percent at current

discharge levels to 4 percent at

proposed BAT discharge levels. Thirtynine (39) pollutants at current and six

pollutants at BAT discharge levels are

projected to exceed in-stream chronic

aquatic life criteria or toxic effect levels.

These projected water quality benefits

are achieved through a 17 percent

reduction in current direct loadings for

the 61 evaluated pollutants by the

proposed BAT regulatory option.

Including loadings of oil and grease and

total suspended solids (TSS), current

pollutant loadings are reduced 36

percent by the proposed BAT regulatory

option. Current pollutant loadings

(including all conventional pollutants)

are also reduced 36 percent by the

proposed BAT regulatory option.

EPA also evaluated the effects of

POTW wastewater discharges of 61

pollutants on receiving stream water

quality at current and proposed

pretreatment levels for a representative

sample of 307 indirect discharging

MP&M facilities. This set of 307

facilities includes 10 facilities that

currently are both direct and indirect

dischargers, but are projected to become

solely direct dischargers at the proposed

option. As with the direct dischargers,

the set of 307 facilities excludes 52

facilities that EPA’s cost model predicts

to close based on current economic

conditions. These 307 facilities

discharge to 264 POTWs with outfalls

located on 249 receiving streams. EPA

extrapolated the results to a nationwide

population of approximately 7,387

facilities which discharge to 7,016

POTWs on 6,864 receiving streams

using the same facility weighting

approach described above for the direct

dischargers. EPA predicted steady-state

in-stream pollutant concentrations after

complete immediate mixing with no

loss from the system, and compared

these levels to EPA-published water

quality criteria or to documented toxic
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28265

effect levels for those chemicals for

which EPA has not published water

quality criteria.

EPA projects that in-stream

concentrations of five pollutants will

exceed human health criteria

(developed for consumption of water

and organisms) in 7 percent of the

receiving streams nationwide at current

discharge levels. The proposed

pretreatment regulatory option reduces

excursions of human health criteria to

three pollutants at 5 percent of the

receiving streams nationwide. The

percentage of receiving streams with instream pollutant concentrations

projected to exceed chronic aquatic life

criteria or toxic effect levels are reduced

from 8 percent at current discharge

levels to 3 percent at the proposed

pretreatment. A total of 19 pollutants at

current and ten pollutants at proposed

pretreatment levels are projected to

exceed in-stream aquatic life criteria or

toxic effect levels. Current loadings of

the 61 pollutants evaluated for water

quality impacts are reduced 32 percent

by the proposed pretreatment regulatory

options. Including oil and grease and

TSS, current pollutant loadings are

reduced 50 percent by the proposed

pretreatment regulatory options.

Including all conventional pollutants,

current pollutant loadings are also

reduced 50 percent by the proposed

pretreatment regulatory options.

EPA also evaluated the potential

adverse impacts on POTW operations

(inhibition of microbial activity during

biological treatment) and contamination

of sludge at the 7,016 POTWs that

receive wastewater from the national

projected population of 7,387 indirect

discharging MP&M facilities. Inhibition

of POTW operations is estimated by

comparing predicted POTW influent

concentrations to available inhibition

levels. Potential contamination of

sludge is estimated by comparing

projected pollutant concentrations in

POTW sludge to available EPA sludge

criteria. EPA evaluated 37 pollutants for

potential POTW operation inhibition

and nine pollutants for potential sludge

contamination. At current discharge

levels, EPA projects inhibition problems

at 16 percent of the POTWs nationwide

caused by 11 different pollutants. At the

proposed pretreatment, EPA projects

inhibition problems at 15 percent of the

POTWs nationwide caused by six

pollutants. The Agency projects sludge

contamination at 13 percent and 9

percent of the POTWs nationwide at

current and proposed pretreatment

regulatory option levels, respectively.

EPA projects that all nine evaluated

pollutants at current and proposed

pretreatment levels exceed sludge

criteria levels.

For the analysis of contamination of

sewage sludge EPA included other

industrial discharges in the sewage

sludge model. EPA evaluated the

benefits of reducing contamination of

sludge in its analysis of projected POTW

sludge disposal practices at current and

proposed pretreatment levels. EPA

performed analyses for a representative

sample set of 80 POTWs with projected

sludge contamination limiting its use for

land application, and extrapolated to a

nationwide population of 1920 POTWs.

Under the proposed pretreatment

regulatory option, 184 of the facilities

will shift into qualifying for land

application of sewage sludge. Land

application quality sludge meets ceiling

pollutant concentration limits, class B

pathogen requirements, and vector

attraction reduction requirements.

Because costs for land application tend

to be lower than those for other disposal

methods, this shift away from

incineration, co-disposal, and surface

disposal results in a cost savings.

The POTW inhibition and sludge

values used in this analysis are not, in

general, regulatory values. EPA based

these values upon engineering and

health estimates contained in guidance

or guidelines published by EPA and

other sources. Therefore, EPA does not

intend to base its regulatory approach

for proposed pretreatment discharge

levels upon the finding that some

pollutants interfere with POTWs by

impairing their treatment effectiveness

or causing them to violate applicable

limits for their chosen disposal

methods. However, the values used in

this analysis help indicate the potential

benefits for POTW operations and

sludge disposal that may result from the

compliance with proposed pretreatment

discharge levels.

XVII. Non-Water Quality

Environmental Impacts

Sections 304(b) and 306 of the Act

require EPA to consider non-water

quality environmental impacts

(including energy requirements)

associated with effluent limitations

guidelines and standards. In accordance

with these requirements, EPA has

considered the potential impact of the

proposed regulation on energy

consumption, air emissions, and solid

waste generation. The Agency has also

considered the impacts of other ongoing

EPA rulemaking efforts on MP&M Phase

I sites.

This regulation was reviewed by EPA

personnel responsible for non-water

quality environmental programs. While

it is difficult to balance environmental

impacts across all media and energy

use, the Agency has determined that the

impacts identified below are justified by

the benefits associated with compliance

with the limitations and standards.

A. Air Pollution

The Agency believes that the inprocess and end-of-pipe technologies

included in the technology options for

this regulation do not generate air

emissions.

The Agency is developing National

Emission Standards for Hazardous Air

Pollutants (NESHAPs) under section

112 of the Clean Air Act (CAA) to

address air emissions of the hazardous

air pollutants (HAPs) listed in Title III

of the CAA Amendments of 1990.

Current and upcoming NESHAPs that

may potentially affect MP&M sites are

listed below.

• Chromium Emissions from Hard

and Decorative Chromium

Electroplating and Chromium

Anodizing Tanks;

• Halogenated Solvent Cleaning;

• Aerospace Manufacturing; and

• Miscellaneous Metal Parts and

Products (Surface Coating).

These NESHAPs will define

maximum achievable control

technology (MACT). Like effluent

guidelines, MACT standards are

technology based. The CAA set

maximum control requirements on

which MACT can be based for new and

existing sources.

The use of chlorinated solvents in the

MP&M industry can create a source of

hazardous emissions. The Agency

believes this regulation will not affect

the use of chlorinated solvents in the

MP&M industry. This regulation neither

requires nor discourages the use of

aqueous cleaners in lieu of chlorinated

solvents.

EPA is addressing emissions of

volatile organic compounds (VOCs)

from industrial waste water through a

Control Techniques Guideline (CTG) for

industrial waste water under section

110 of the CAA (Title I of the 1990 CAA

Amendments). The MP&M industry is

one of several industries that would be

covered by the industrial waste water

CTG. The industrial waste water CTG

will provide guidance to states in

recommending reasonably available

control technologies (RACT) for VOC

emissions from industrial waste water at

sites located in areas failing to attain the

National Ambient Air Quality Standard

for ozone.

B. Solid Waste

Solid waste generation includes

hazardous and nonhazardous waste

water treatment sludge as well as waste
28266 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

oil removed in waste water treatment.

EPA estimates that compliance with this

regulation will result in a decrease in

waste water treatment sludge and an

increase in waste oil generated at MP&M

Phase I sites.

EPA estimates that MP&M Phase I

sites generated 33 million gallons of

waste water treatment sludge and 8.1

million gallons of waste oil in 1989 from

the treatment of waste water. The

amount of waste water treatment sludge

and waste oil expected to be generated

at each of the technology options is

presented in Table 23.

TABLE 23.—WASTE TREATMENT

SLUDGE AND OIL GENERATION BY

OPTION

Option

Waste

water treatment sludge

generated

(million gallons/year)

Waste oil

generated

(million gallons/year)

Baseline (1989) . 33 8.1

Option 1 ............ 31 38

Option 2 ............ 21 36

Option 3 ............ 21 36

Source: U.S. Environmental Protection

Agency.

As shown in Table 23, waste water

treatment sludge generation decreased

from baseline to Option 1 (which

consists of end-of-pipe treatment

without in-process flow control). The

net decrease is attributed to the fact that

Option 1 includes sludge dewatering,

which may result in a significant

decrease in sludge generation for sites

that have chemical precipitation and

settling technologies without sludge

dewatering in place at baseline. Sludge

reduction is not expected at sites which

already have sludge dewatering in the

baseline. An increase of sludge is

expected to occur at sites which do not

have treatment in place but are expected

to install treatment under the MP&M

options.

The sludge reduction from Option 1

to Option 2 is attributed to the water

conservation and pollution prevention

technologies included in Option 2. EPA

expects these technologies to result in

sludge reduction for the following

reasons:

—In-process metals recovery for

electroplating rinses, recycling of coolants,

and recycling of paint curtains reduce the

mass of metal pollutants in treatment

system influent streams, which in turn

reduces the amount of sludge generated

during metals removal;

—Bath maintenance practices included in

Option 2 reduce the mass of metal

pollutants discharged to treatment, which

in turn reduces the amount of sludge

generated during metals removal; and

—Water conservation technologies included

in Option 2 reduces the discharge mass of

metals present in the source water to a site

(e.g., calcium, sodium), which in turn

reduces the amount of sludge generated

during removal of these metals.

EPA does not expect Option 3 to

result in additional sludge generation or

reduction over Option 2.

Sludges generated at MP&M sites are

often determined to be hazardous under

the Resource Conservation and

Recovery Act (RCRA) as either a listed

or characteristic waste based on the

following information:

• If the site performs electroplating

operations, and this waste water is mixed

with the other waste water treated on site,

the resulting sludge is a listed hazardous

waste F006 (40 CFR 261.31), or

• If the sludge or waste oil from waste water

treatment exceeds the standards for the

Toxicity Characteristic Leaching Procedure

(i.e. is hazardous), or exhibits other RCRAdefined hazardous characteristics (i.e.,

reactive, corrosive, or flammable) it is

considered a characteristic hazardous

waste. (40 CFR 261.24).

Additional federal, state, and local

regulations may result in MP&M sludges

being classified as hazardous wastes.

Determinations on whether a waste is

hazardous are made by permitting

authorities on a case-by-case basis.

Based on information collected during

site visits and sampling episodes, the

Agency believes that some of the solid

waste generated would not be classified

as hazardous. However, for purposes of

compliance cost estimation, the Agency

assumed that all solid waste generated

as a result of the technology options

would be hazardous.

The increase in waste oil generation

from baseline to Option 1 is attributed

to removal of oil from MP&M waste

waters prior to discharge to POTWs or

surface waters. Option 1 includes oilwater separation for oil-bearing waste

waters. This technology removes oil

from the waste water. The waste oil is

usually either recycled on site or off

site, or contract hauled for disposal as

either a hazardous or nonhazardous

waste. The increase of waste oil

generation reflects a transfer of oil from

the waste water to a more concentrated

waste oil, and does not reflect an

increase in overall oil generation at

MP&M Phase I sites. For the purpose of

compliance cost estimation, EPA

assumed that all waste oil was contract

hauled for disposal; however, EPA

expects that some of the waste oil can

be recycled either on site or off site.

The decrease in waste oil generation

from Option 1 to Option 2 is attributed

to the 80% reduction of coolant

discharge using the recycling

technology included in the Option 2

technology train. This system recovers

and recycles oil-bearing machining

coolants at the source, reducing the

generation of spent coolant.

EPA does not expect Option 3 to

result in additional waste oil generation

or reduction over Option 2.

The in-process technologies of ionexchange/and electrolytic recovery

included in both Options 2 and 3

provide the pollution prevention

benefits of reclaiming 1.7 million

pounds of metal annually. This reuse

reduces the solid waste generation at the

end-of-pipe for the treatment of waste

water from operations using these

technologies. In addition, as stated

above, the rule is expected to reduce

metal contaminants in the sludges

generated by POTWs. This is expected

to allow POTWs to dispense of the

lower metal content sludge by more

environmentally beneficial methods

(See Section XV).

C. Energy Requirements

EPA estimates that compliance with

this regulation will result in a net

increase in energy consumption at

MP&M Phase I sites. Estimates of

increased energy usage by option are

presented in Table 24. Option 1 requires

the greatest energy usage. The inprocess flow control and recycling

technologies included in Option 2

reduce the amount of water use. While

these technologies require some energy,

net energy consumption is reduced

under Option 2 since the reduced

hydraulic loading reduces the end-ofpipe treatment energy required. This

results in an overall decrease in energy

requirements from Option 1 to Option 2.

The additional end-of-pipe technology

included in Option 3 (ion-exchange)

increases energy consumption from

Option 2 to Option 3.

TABLE 24.—ENERGY REQUIREMENTS

BY OPTION

Option

Energy required (million kilowatt

hrs/yr)

Baseline (1989) ........................ 610

Option 1 .................................... 810

Option 2 .................................... 740

Option 3 .................................... 760

Source: U.S. Environmental Protection

Agency.

By comparison, 2,805 billion kilowatt

hours of electric power were generated

in the United States in 1990. Additional

energy requirements for Option 1

(which has the greatest energy
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28267

requirements) correspond to

approximately 0.007 percent of national

requirements. The increase in energy

requirements due to the implementation

of MP&M technologies will in turn

cause an air emissions impact from the

electric power generation facilities. The

increase in air emissions is expected to

be proportional to the increase in energy

requirements or approximately 0.007

percent.

XVIII. Regulatory Implementation

A. Upset and Bypass Provisions

A ‘‘bypass’’ is an intentional diversion

of the streams from any portion of a

treatment facility. An ‘‘upset’’ is an

exceptional incident in which there is

unintentional and temporary

noncompliance with technology-based

permit effluent limitations because of

factors beyond the reasonable control of

the permittee. EPA’s regulations

concerning bypasses and upsets are set

forth at 40 CFR §§ 122.41(m) and (n).

B. Variances and Modifications

The CWA requires application of

effluent limitations established pursuant

to section 301 or pretreatment standards

of section 307 to all direct and indirect

dischargers. However, the statute

provides for the modification of these

national requirements in a limited

number of circumstances. Moreover, the

Agency has established administrative

mechanisms to provide an opportunity

for relief from the application of the

national effluent limitations guidelines

and pretreatment standards for

categories of existing sources for toxic,

conventional, and nonconventional

pollutants.

1. Fundamentally Different Factor

Variances. EPA will develop effluent

limitations or standards different from

the otherwise applicable requirements if

an individual discharging facility is

fundamentally different with respect to

factors considered in establishing the

limitation of standards applicable to the

individual facility. Such a modification

is known as a ‘‘fundamentally different

factors’’ (FDF) variance.

Early on, EPA, by regulation provided

for the FDF modifications from the BPT

effluent limitations, BAT limitations for

toxic and non-conventional pollutants

and BCT limitations for conventional

pollutant for direct dischargers. For

indirect dischargers, EPA provided for

modifications from pretreatment

standards. FDF variances for toxic

pollutants were challenged judicially

and ultimately sustained by the

Supreme Court. Chemical

Manufacturers Assn v. NRDC, 479 U.S.

116 (1985).

Subsequently, in the Water Quality

Act of 1987, Congress added new

section 301(n) of the Act explicitly to

authorize modifications of the otherwise

applicable BAT effluent limitations or

categorical pretreatment standards for

existing sources if a facility is

fundamentally different with respect to

the factors specified in section 304

(other than costs) from those considered

by EPA in establishing the effluent

limitations or pretreatment standard.

Section 301(n) also defined the

conditions under which EPA may

establish alternative requirements.

Under Section 301(n), an application for

approval of FDF variance must be based

solely on 1) information submitted

during rulemaking raising the factors

that are fundamentally different or 2)

information the applicant did not have

an opportunity to submit. The alternate

limitation or standard must be no less

stringent than justified by the difference

and must not result in markedly more

adverse non-water quality

environmental impacts than the

national limitation or standard.

EPA regulations at 40 CFR part 125

subpart D, authorizing the Regional

Administrators to establish alternative

limitations and standards, further detail

the substantive criteria used to evaluate

FDF variance requests for direct

dischargers. Thus, 40 CFR § 125.31(d)

identifies six factors (e.g., volume of

process waste water, age and size of a

discharger’s facility) that may be

considered in determining if a facility is

fundamentally different. The Agency

must determine whether, on the basis of

one or more of these factors, the facility

in question is fundamentally different

from the facilities and factors

considered by the EPA in developing

the nationally applicable effluent

guidelines. The regulation also lists four

other factors (e.g., infeasibility of

installation within the time allowed or

a discharger’s ability to pay) that may

not provide a basis for an FDF variance.

In addition, under 40 CFR 125.31(b) (3),

a request for limitations less stringent

than the national limitation may be

approved only if compliance with the

national limitations would result in

either (a) a removal cost wholly out of

proportion to the removal cost

considered during development of the

national limitations, or (b) a non-water

quality environmental impact

(including energy requirements)

fundamentally more adverse than the

impact considered during development

of the national limits. EPA regulations

provide for an FDF variance for indirect

dischargers at 40 CFR 403.13. The

conditions for approval of a request to

modify applicable pretreatment

standards and factors considered are the

same as those for direct dischargers.

The legislative history of Section

301(n) underscores the necessity for the

FDF variance applicant to establish

eligibility for the variance. EPA’s

regulations at 40 CFR 125.32(b) (1) are

explicit in imposing this burden upon

the applicant. The applicant must show

that the factors relating to the discharge

controlled by the applicant’s permit

which are claimed to be fundamentally

different are, in fact, fundamentally

different from those factors considered

by the EPA in establishing the

applicable guidelines. The pretreatment

regulation incorporate a similar

requirement at 40 CFR 403.13(h) (9).

2. Economic Variances. Section 301(c)

of the CWA authorizes a variance from

the otherwise applicable BAT effluent

guidelines for nonconventional

pollutants due to economic factors. The

request for a variance from effluent

limitations developed from BAT

guidelines must normally be filed by the

discharger during the public notice

period for the draft permit. Other filing

time periods may apply, as specified in

40 CFR 122.21(1) (2). Specific guidance

for this type of variance is available

from EPA’s Office of Waste Water

Management.

3. Water Quality Variances. Section

301(g) of the CWA authorizes a variance

from BAT effluent guidelines for certain

nonconventional pollutants due to

localized environment factors. These

pollutants include ammonia, chlorine,

color, iron, and total phenols.

4. Permit Modifications. Even after

EPA (or an authorized State) has issued

a final permit to a direct discharger, the

permit may still be modified under

certain conditions. (When a permit

modification is under consideration,

however, all other permit conditions

remain in effect.) A permit modification

may be triggered in several

circumstances. These could include a

regulatory inspection or information

submitted by the permittee that reveals

the need for modification. Any

interested person may request that a

permit modification be made. There are

two classifications of modifications;

major and minor. From a procedural

standpoint, they differ primarily with

respect to the public notice

requirements. Major modifications

require public notice while minor

modifications do not. Virtually any

modification that results in less

stringent conditions is treated as a major

modifications, with provisions for

public notice and comment. Conditions

that would necessitate a major

modification of a permit are described
28268 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

in 40 CFR 122.62. Minor modifications

are generally non-substantive changes.

The conditions for minor modification

are described in 40 CFR 122.63.

C. Relationship to NPDES Permits and

Monitoring Requirements

The BPT, BAT and NSPS limitations

in today’s proposed rule would be

applied to individual MP&M Phase I

plants through NPDES permits issued

by EPA or approved State agencies

under section 402 of the Act. The

preceding section of this preamble

discussed the binding effect of this

regulation on NPDES permits, except

when variances and modifications are

expressly authorized. This section adds

more detail on the relationship between

this regulation and NPDES permits.

One issue is how this regulation will

affect the powers of NPDES permitissuing authorities. EPA has developed

the limitations and standards in the

proposed rule to cover the typical

facility for this point source category.

This regulation does not restrict the

power of any permitting authority to act

in any manner consistent with law or

these or any other EPA regulations,

guideline, or policy.

Even if a facility is totally without

waste water discharge, an NPDES

permit may be requested by the facility

to provide upset provisions which

would not apply to discharge in the

absence of a permit.

Another concern is the operation of

EPA’s NPDES enforcement program,

which was an important consideration

in developing today’s proposal. The

Agency emphasizes that although the

Clean Water Act is a strict liability

statute, EPA can initiate enforcement

proceedings at its discretion. EPA has

exercised and intends to exercise that

discretion in a manner that recognizes

and promotes good faith compliance.

D. Best Management Practices

Section 304(e) of the Act authorizes

the Administrator to prescribe ‘‘best

management practices’’ (BMPs). EPA

may develop BMPs that apply to all

industrial sites or to a designated

industrial category and may offer

guidance to permit authorities in

establishing management practices

required by unique circumstances at a

given plant. Dikes, curbs, and other

control measures are being used at some

MP&M sites to contain leaks and spills

as part of good ‘‘housekeeping’’

practices. However, on a facility-byfacility basis a permit writer may choose

to incorporate BMPs into the permit.

XIX. Solicitation of Data and Comments

EPA invites and encourages public

participation in this rulemaking. The

Agency asks that comments address any

perceived deficiencies in the record of

this proposal and that suggested

revisions or corrections be supported by

data where possible.

EPA particularly requests comments

and information on the following issues:

1. Oil & Grease as Indicator for

Organics. EPA believes that today’s

proposal of an oil and grease

pretreatment standard as a indicator for

specific organic pollutants will ensure

that there is adequate treatment and

removal of the organic pollutants found

in MP&M waste water. The organic

constituents originate in waste waters

such as metal working fluids, corrosion

prevention coating solutions, paints and

solutions developed to clean the oils

from the metal surface. EPA believes

that treatment and removal of oil and

grease will effectively remove the

organics. Nonetheless, EPA’s data are

incomplete for all organics, and EPA

can not predict what products may

serve as substitutes for solvents that

EPA is in the process of regulating

under EPA’s ozone depletion policy.

Further, in recognition of the present

state of changeover occurring in the

industry, it may be premature to set

limits based on today’s practices.

Therefore, EPA at promulgation may

defer control of organic waste water

pollutants until the MP&M Phase II rule

is proposed. EPA requests comments on

the establishment of oil and grease as an

indicator parameter for specific organics

and on the current practices and where

industry is moving with respect to

solvent cleaners and their substitution

in industrial processes. EPA is

interested in available information

about current substitutions and their

effectiveness.

2. Flow Cut-offs and Administrative

Burden. EPA divided the population of

existing indirect dischargers into two

flow categories for the purpose of data

analysis and implementation. The

existing indirect discharger flow cut-off

of 1,000,000 gallons per year was based

on a careful review of the data. For a site

operating 250 days per year, 1,000,000

gallons per year translates into an

average discharge flow rate of 4,000

gallons per day.

This approach is in response to

concerns raised by Control Authorities

and Regional and state Pretreatment

Coordinators regarding the burden that

would be imposed on them, if they were

required to establish mass-based

discharge permits for all MP&M Phase I

sites within a three-year period.

EPA requests comments on the

proposed indirect discharger flow cutoff which was used to define the two

flow categories established for PSES.

EPA requests comments on the

possibility of a different cut-off at

25,000 gallons per day to define large

flow existing indirect discharger sites

(25,000 gallons per day equals

approximately 6,250,000 gallons per

year). The 25,000 gallons per day figure

is currently used by the Agency as one

definition for a significant industrial

user (SIU). EPA requests comments on

revising the flow cut-off and requiring

mass-based permits for existing sites

indirectly discharging more than 25,000

gallons per day. Existing indirect sites

discharging less than 25,000 gallons per

day could be exempt or covered by

concentration based limits. Tables 25

and 26 compare the distribution of total

annual flow and pollutant loadings

discharged from MP&M Phase I indirect

discharging sites using the 25,000

gallons per day (6,250,000 gallons per

year) cut off to the distribution using the

1,000,000 gallons per year cut off.

TABLE 25.—ESTIMATED DISTRIBUTION OF INDIRECTLY DISCHARGING SITES BY BASELINE FLOW AND LOAD a

Flow Range (gal/yr/site) Estimated

No. of sites

Estimated

total flowin

range (millions of gal/

year)

Estimated

total load in

range (millions of lbs/

year)

Estimated

percent of

total sites

Estimated

percent of

total flow

Estimated

percent of

total load

0-6,250,000 ....................................................................... 8,065 4,600 550 93 23 38

Greater than 6,250,000 .................................................... 641 15,000 900 7 77 62

Totals ......................................................................... 8,706 19,000 1,400 100 100 100

Source: U.S. Environmental Protection Agency.
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28269

aAn estimated 364 MP&M sites discharged both directly and indirectly in the baseline. In order to evaluate indirect and direct discharges separately, the expected post compliance discharge status was used to assign these sites to either direct or indirect for the purpose of this table. The

assignment was based on technical factors which are included in the public record.

TABLE 26.—ESTIMATED DISTRIBUTION OF INDIRECTLY DISCHARGING SITES BY BASELINE FLOW AND LOAD a

Flow range (gal/yr/site) Estimated

No. of sites

Estimated

total flow in

range (millions of gal/

year)

Estimated

total load in

range (millions of lbs/

year)

Estimated

percent of

total sites

Estimated

percent of

total flow

Estimated

percent of

total load

Less than 1,000,000 ......................................................... 6,708 744 138 78 4 10

Greater than 1,000,000 .................................................... 1,998 18,000 1,300 22 96 90

Totals ......................................................................... 8,706 19,000 1,400 100 100 100

Source: U.S. Environmental Protection Agency.

aAn estimated 364 MP&M sites discharged both directly and indirectly in the baseline. In order to evaluate indirect and direct discharges separately, the expected post compliance discharge status was used to assign these sites to either direct or indirect for the purpose of this table. The

assignment was based on technical factors which are included in the public record.

EPA also requests comments from

Control Authorities and Pretreatment

Coordinators regarding the burden

alleviated by this proposal. Specifically,

how many labor hours are estimated to

be saved by the proposed exemption,

and how much money would be saved

by municipalities.

EPA understands that accurate flow

measurement can be difficult and costly,

especially at sites with widely varying

flow rates and at sites with very low

flow rates. Therefore, EPA also solicits

comments on the accuracy and cost of

available flow monitoring devices.

EPA also solicits comments,

particularly from Control Authorities or

Pretreatment Coordinators, on whether

the proposed approach would be

harmful to the environment.

Specifically, is there evidence that some

of the sites that would be exempt are

currently causing problems at POTWs?

Secondly, would mass-based

requirements alleviate the problem?

3. Exemption of Low Discharge

Volume Indirect Sources. EPA is

soliciting comments on proposed

exemption of existing low discharge

volume indirect sources from the MP&M

Phase I categorical pretreatment

standards.

EPA considered a number of different

flow cutoffs that could be used for the

proposed exemption The number of

sites which discharge less than

1,000,000 gallons per year and their

contribution to the waste water

discharge flow rate from the MP&M

category (only 4%of the total) are

provided in Table 26. Instead of the

1,000,000 gallons per year flow cutoff,

other flow cutoffs could be used. For a

site operating 250 days per year,

1,000,000 gallons per year would

translate into 4,000 gallons per day.

As an alternative to exempting

existing low discharge volume indirect

discharges, EPA could reduce the 40

CFR part 403 requirements on frequency

of monitoring and reporting by

industrial users and frequency of

inspections and testing by the Control

Authorities for these sites. If the

requirements of 40 CFR part 403 were

reduced instead of exempting low

volume dischargers, this change could

be tied to certain objective criteria (e.g.

demonstrated compliance over time).

EPA solicits comments on whether

monitoring and inspections should be

required more frequently in situations of

continued non-compliance, planned

expansion, etc.

EPA solicits comments and data on

the environmental impact the proposed

exemption would cause. EPA also

solicits comments and data on the

burden imposed on Control Authorities

by the possible inclusion of these low

discharge volume sites under this rule.

Finally, EPA solicits comments on the

proposed exemption of low discharge

volume indirect dischargers in relation

to possible changes to the Clean Water

Act that may reflect on the Domestic

Sewage Exclusion provided for under

RCRA section 1007 [27] (40 CFR 261.4

(a)(1)). In the bill before the last

Congress to amend the Clean Water Act,

the Agency took the position that the

Domestic Sewage Exclusion provisions

should be limited and apply only under

the following conditions:

1. the source and wastestream are subject

to or are scheduled to be subject to a

categorical pretreatment standard;

2. the pollutant and source are subject to

a technically based local limit developed by

a POTW, or a technology based local limit

developed by EPA or a State;

3. the waste is generated in de minimis

amounts by a household or similar noncommercial entity; or

4. the source and wastestream are covered

by a Toxicity Reduction Action Plan (TRAP),

as defined by the statute.

Considering these conditions could be

included in future amendments to the

Clean Water Act, EPA solicits comments

on the impact these amendments could

have on proposed exemption of low

discharge volume indirect dischargers.

4. Alternative to Mass-Based

Compliance. EPA requests comments on

an alternate compliance approach for

large volume existing indirect

dischargers under PSES. EPA is

considering an alternate compliance

approach for the existing indirect

discharging large volume sites (sites

defined in this proposal as having an

annual discharge volume greater than

1,000,000 gallons). For a site operating

250 days per year, 1,000,000 gallons per

year translates into an average discharge

flow rate of 4,000 gallons per day. These

sites would have to comply with a massbased permit or choose the alternative of

establishing compliance with the

pretreatment standards by certifying in

writing to the Control Authority that

they have installed in-process

technologies equivalent to those costed

as the basis of the BPT Option 2

technology. The in-process control

technologies of Option 2 include:

• Flow reduction using flow restrictors,

conductivity meters, and/or timed rinses for

all flowing rinses, plus countercurrent

cascade rinsing for all flowing rinses;

• Flow reduction using bath maintenance

for all other process water-discharging

operations;

• Centrifugation and 100 percent recycling

of painting water curtains;

• Centrifugation and pasteurization to

extend the life of water-soluble machining

coolants reducing discharge volume by 80%;

and

• In-process metals recovery using ion

exchange followed by electrolytic recovery of

cation regenerants for selected electroplating

rinses. This includes first-stage drag-out

rinsing with electrolytic metal recovery.

EPA solicits comments on the list of inprocess technologies above: should
28270 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

additional in-process technologies be

added, should any of the in-process

technologies listed above not be

included, would problems arise with

how these technologies are defined, etc.

If the alternative compliance approach

is included in the final rule, the list of

in-process technologies may differ

somewhat from the list above based on

public comment. EPA may include this

approach of an alternate PSES

requirement in the final rule and thus

requests comments on this approach.

EPA’s purpose for offering this as an

alternate compliance approach is to

provide relief to Control Authorities

from the burden associated with the

development of mass-based permits.

EPA is not proposing this alternative

compliance approach, since a decision

as to whether or not to offer this

alternative will rely on comments and

additional data as to the utility of such

an approach.

Specifically, EPA encourages MP&M

sites to offer comments regarding the

technical feasibility of the in-process

control measures that would be required

to be eligible for the alternate

compliance approach, as well as an

estimate of the burden (in labor hours)

associated with submitting a

certification.

EPA also solicits comments from

Control Authorities and Pretreatment

Coordinators on the benefits and savings

in time and manpower expected to be

achieved whenever a site takes

advantage of this alternate compliance

approach. Comments should account for

any burden associated with maintaining

certifications and conducting

inspections.

EPA has considered another option of

requiring all indirect dischargers to

comply with concentration-based

permits and mandatory pollution

prevention practices. Some Control

Authorities have indicated a preference

for this type of approach for ease of

enforcement and implementation,

therefore, EPA seeks comments on this

option as well.

5. Cyanide Monitoring Waiver.

Although cyanide is essential in many

electroplating operations, the Agency is

aware that some metal products and

machinery plants do not use cyanide. In

some existing regulations, this issue has

been addressed by allowing plants to

only monitor annually for cyanide if the

annual waste water sample is below the

regulatory long term average and if the

plant owner or operator certifies in

writing to the POTW authority or permit

issuing authority that cyanide is not and

will not be used on site. For example,

see 40 CFR 467.03. For MP&M, the

regulatory long term average for cyanide

is 0.02 mg/l.

The Agency is soliciting comments on

the possibility of including such a

provision to allow plants to not monitor

for cyanide. The comments should

address the utility of this provision, the

amount of unnecessary monitoring

avoided, the economic impacts, the

environmental impacts, and any other

information relevant to the decision.

EPA also solicits comments as to what

form the certification should take and at

what frequency it should be required.

6. Other Pollutant Monitoring

Waivers. Similar to the alternate

approach for cyanide discussed above,

the Agency is also considering allowing

sites to opt out from monitoring specific

metals if the site can certify that the

metal is not used in any way at their

site. This may be restricted to metals

such as cadmium, chromium and

nickel, which are frequently plated onto

a base metal or used in the surface

treatment of metals. EPA solicits

comments on this approach, specifically

whether it should be limited to certain

metals such as those mentioned, or

whether it could apply to all regulated

metal pollutants. EPA also solicits

comments as to what form the

certification should take and at what

frequency it should be required.

7. Additional Unit Operations. EPA

has identified 47 unit operations which

are typically performed at MP&M sites.

EPA requests comments on additional

operations which may be performed at

MP&M sites and which have not been

listed in today’s notice. Please specify

whether these operations have a waste

water stream associated with them,

what is the estimated volume of the

waste water, what is the frequency of

the operation, and whether it is similar

to any of the 47 operations already

identified.

8. Assignment of Industrial Sectors.

EPA has discussed the assignment of

industrial sector to MP&M plants in

today’s notice and has provided several

examples of how to assign sites to

industrial sectors based on the products

produced. EPA is soliciting comment

from any industrial site which has the

potential to be covered by MP&M but is

uncertain as to their appropriate

industrial sector and phase (MP&M

Phase I or MP&M Phase II)

classification. Sites are requested to

supply information about what

operations they are performing, what

products they are manufacturing,

rebuilding or maintaining, and to what

industries they are selling their products

or providing their services.

9. Possible Addition of Lead as

Regulated Parameter. Lead is a regulated

parameter under several existing metals

regulations (e.g. metal finishing 40 CFR

part 433), but lead was rarely found at

treatable concentrations in the raw

waste water, prior to treatment, at the

sites sampled for MP&M Phase I. As a

result, EPA is not proposing a lead

limitation. EPA is considering collecting

additional data or transferring data from

the metal finishing category in order to

regulate lead in the final MP&M Phase

I regulation. If lead were regulated based

on data transferred from the metal

finishing rule, then the limits would be

similar to those listed in metal finishing.

The metal finishing daily maximum

limit for lead is 0.69 milligrams per

liter, and the monthly average limit for

lead is 0.43 milligrams per liter. If lead

were regulated based on the collection

of additional data, then the MP&M

Phase I lead limits could be lower than

the lead limits in the metal finishing

regulation. EPA is soliciting comments

and data on the possibility of adding

lead to the list of regulated parameters

for MP&M Phase I. EPA is soliciting

comments on the use of lead in the

MP&M Phase I category (e.g. in what

operations is lead used, how much is

used, do these operations discharge

process waste water, how prevalent are

these operations, etc.).

10. Possible Addition of Other

Regulated Parameters. The list of

parameters which EPA proposes to

regulate under MP&M Phase I are shown

in Table 2 of this document. EPA is

soliciting comments and data on

additional parameters that should be

considered for regulation. EPA is

proposing a total cyanide limit for

MP&M Phase I. In other rules such as

metal finishing (40 CFR part 433), EPA

has set a total cyanide limit and

included an alternative amenable

cyanide limit. EPA is soliciting

comments on whether or not an

amenable cyanide limit should be

offered as an alternative to the proposed

total cyanide limit.

11. Possible Deletion of Regulated

Parameters. The list of parameters

which EPA proposes to regulate under

MP&M Phase I are shown in Table 2 of

this document. EPA is soliciting

comments and data on parameters that

should be deleted from consideration

for regulation.

12. Additional Technology Data. In

this document, the Agency proposes a

new source standard equivalent to BAT,

in part because, given the available data,

the Agency concludes there is no addon technology that is cost-effective for

the entire Metal Products and

Machinery category suitable for a more

stringent new source standard.

However, the Agency solicits comments
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28271

on other technologies and pollution

prevention techniques that may be

appropriate and cost-effective for new

sources in subcategories of the Metal

Products and Machinery category.

For each technology or pollution

prevention technique, the Agency is

particularly interested in receiving data

on: (1) Technology performance,

including pollutant reduction/

elimination and flow reduction/

elimination; (2) economics, including

initial capital investment, operation and

maintenance costs, payback period,

waste disposal savings, material input

savings, and other savings; (3) overall

energy use; (4) sludge generation,

including metals recoverability and the

ability of sludge to be recycled on or offsite; (5) applicability of a given

technique across the whole MP&M

Phase I population or across a particular

MP&M sector, SIC code, or other

industrial sector breakdown; and (6) air

quality impacts and emissions. In

addition, as some technologies and

pollution prevention techniques

eliminate or reduce discharges to water,

but not to other media, the Agency

solicits comments on the environmental

impacts and regulatory costs associated

with each technology’s impact on other

environmental media.

Specifically, the Agency solicits

information and comments concerning

the pollution prevention performance,

cross-media environmental impacts, and

economic effects associated with the

following technologies and pollution

prevention techniques, even if the

technology can only be applied to a

subcategory of the MP&M category:

(1) Ion Exchange;

(2) Electrodialysis / Electrowinning;

(3) Reverse Osmosis;

(4) Evaporation (low pressure,

conventional);

(5) Diffusion dialysis;

(6) Conductive polymer films;

(7) Alternatives to electroplating (e.g.

powder coating, aqueous soaks,

ultrasonics);

(8) Flow-through barrel plating; and

(9) Micro-filtration.

The Agency particularly welcomes

comments on technology performance

and cost from technology vendors and

developers, in addition to comments

from industrial users.

13. Technical Assistance. The Agency

is soliciting comments on the degree to

which technical assistance would help

MP&M facilities identify and choose

compliance strategies which include

pollution prevention technologies and

practices that are most cost-effective and

protective of the environment.

If commenters believe technical

assistance would be valuable, EPA

invites comments and data to address

the following questions. What would be

the most productive source (e.g. EPA,

state, or local environmental agencies;

departments of commerce or

development; universities; non-profit

organizations; private trade

associations) of technical assistance?

What would be the most productive

form (e.g. printed material, electronic

bulletin boards, telephone hotlines, onsite visits) of technical assistance?

Commenters who currently use the

technical assistance services provided

in most states are requested to respond

as to the utility of the services which

they use. Would commenters be willing

to pay a reasonable fee for such

services?

14. Consolidated Reporting and

Permitting. EPA understands that

MP&M facilities often must comply with

several different reporting and

permitting requirements for different

media (i.e. air, water, and solid waste).

These separate requirements could

inhibit the development of

comprehensive site-wide environmental

compliance strategies. For example,

some pollution prevention strategies

which reduce overall environmental

impact can be complicated by having to

comply with separate media

requirements. The Agency is soliciting

comments on the degree to which

separate reporting and permitting

programs for different media hinder

comprehensive site-wide environmental

compliance strategies or pollution

prevention approaches at MP&M

facilities. EPA is soliciting data related

to specific examples.

15. Impact of Procurement Practices.

EPA is soliciting comments on the

degree to which certain government and

private procurement practices (product

specifications) inhibit MP&M facilities

from using pollution prevention

technologies and practices, especially in

cases where such technologies and

practices could yield a cost effective,

quality product with less risk to the

environment. EPA is soliciting data

related to specific examples.

16. Pollution Prevention Planning.

Several states require MP&M facilities to

develop various types of pollution

prevention plans. EPA is soliciting

comments from MP&M facilities which

are currently required to develop

pollution prevention plans as to

whether or not the planning

requirements were productive in

identifying cost-effective pollution

prevention practices, whether the

permit process inhibited the use of such

pollution prevention practices

developed in the plans, and how the

permit process could be changed to

encourage the use of such pollution

prevention practices.

17. Financing Pollution Prevention.

EPA is soliciting comments as to the

degree to which MP&M facilities have

encountered difficulty in acquiring

capital for pollution prevention projects.

EPA is soliciting data related to specific

examples.

18. Contiguous Site Definition. EPA

seeks comments on how to define which

parcels of property within the same

fence line on a mixed use property are

contiguous. For example, should

properties be divided into a system of

grids with all discharges from sites

within a single sector considered

contiguous? Should discharges from a

single building be treated as a plant or

portion of a plant for purposes of

determining the volume of discharge

subject to regulation? Another option

would be for permit writers to make the

determination case-by-case based on

some degree of proximity between

industrial operations and a practical

application of the requirements for

MP&M Phase I industries (with due

consideration to the amount of MP&M

Phase I wastestream and its

concentration in the overall wastestream

discharged to the treatment works), the

degree to which functions are related,

and such other factors as EPA considers

relevant to the determination.

19. Flow Definition. In this proposal,

EPA has defined existing small volume

indirect dischargers as existing indirect

sites which discharge less than one

million gallons per year. EPA is

soliciting comments on whether the

flow cut off for this exemption should

be provided as a daily flow rate. For

example, for a site operating 250 days

per year, one million gallons discharge

per year is equivalent to an average

discharge of 4,000 gallons per day.

20. Municipalities. EPA has not

examined the potential cost of

compliance or environmental benefit

from regulating municipal facilities

which manufacture, maintains or

rebuilds finished metal parts, products

or machines within one of the seven

industrial sectors in MP&M Phase I.

EPA believes most municipal MP&M

facilities would be existing indirect

dischargers discharging less than one

million gallons per year and would

therefore be exempt from this

regulation. However, EPA is seeking

comment from municipalities which

would qualify as MP&M Phase I sites

and which would not qualify for the low

flow exemption. Depending on the

comments and data received, EPA could

perform additional analyses to

specifically cover municipal MP&M

facilities, or EPA could specifically
28272 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

exempt municipal MP&M facilities,

especially if regulating such facilities is

determined to be an unfunded mandate.

21. Subcategorization. In today’s

notice, the Agency proposes to treat the

Metal Products and Machinery industry

as one category with a uniform BAT and

new source standard. A single standard

provides simplicity and clarity in

compliance, permitting, and

enforcement and, thus, may reduce

compliance and implementation costs.

However, the Agency recognizes that

subcategorization may provide

additional environmental benefits.

Certain treatment technologies, for

example, may reduce effluent loadings

but may only be economically feasible

for a subset of the regulated community.

Since, according to available data, such

technologies are not applicable to the

entire industry category, the Agency has

not selected such a technology for either

the BAT or new source standards. The

Agency solicits comments on how to

balance the potential regulatory impacts

of subcategorization against the

potential environmental benefits of a

more stringent BAT or new source

standard for a subset of the Metal

Products and Machinery category.

22. Innovative Approaches to Reduce

Regulatory Burden. The Agency solicits

comments on innovative regulatory

approaches that offer incentives for

users to employ more effective pollution

prevention or treatment technologies by

reducing their regulatory burden. For

example, a more stringent new source

standard for a subcategory of the

industry could include reduced

monitoring or reporting requirements

that could offset potentially higher

compliance costs. In addition, the

Agency could include a program that

would offer similar regulatory flexibility

to existing users who opt into permit

conditions equal to a more stringent

new sources standard. Similarly, a

voluntary program that allows users to

opt to meet more stringent technology

standards in return for reduced

monitoring and other requirements

could be offered to both new and

existing users even in the absence of

either a more stringent new source

standard or BAT standard. The Agency

welcomes comments on these and other

innovative approaches that could

simultaneously improve water quality

and ease regulatory burdens.

23. Data Collection. With today’s

notice, the Agency wishes to

communicate to the regulated

community its strong interest in

providing incentives for incorporating

the best technologies into the final rule

using approaches that reduce regulatory

burdens. The Agency hopes that its

consideration of these possible

innovative approaches reduces any

potential disincentives for collecting

and submitting technology cost and

performance data. While the Agency

retains its authority under section

308(q) of the Act, the Agency hopes that

its consideration of innovative and

voluntary approaches will maximize

voluntary data submissions during the

comment period following today’s

proposal.

24. Benefits Methodology. EPA

acknowledges the unavoidable

uncertainty associated with estimating

benefits. EPA believes that it has used

the best methodology available for

estimating benefits. EPA is soliciting

comments on the reliability and

accuracy of the methods used and

suggestions on alternative methods

which could be used for the final rule.

25. Unfunded Mandates. EPA believes

that the proposed regulation represents

the most cost effective approach. EPA

acknowledges that the proposed

regulation may not be the least

burdensome, but EPA believes that the

additional costs are justified due to the

additional pollutant removals achieved.

With respect to the Unfunded Mandates

Act, EPA is soliciting comments and

data on cost effective alternatives which

are less burdensome. In addition, EPA

solicits comment on how to interpret

‘‘most cost effective’’ in the context of

the effluent guideline program.

XX. Guidelines for Comment

Submission of Analytical Data

EPA requests that commentors to

today’s proposed rule submit analytical,

flow, and production data to

supplement data collected by the

Agency during the regulatory

development process. To ensure that

commentor data may be effectively

evaluated by the Agency, EPA has

developed the following guidelines for

submission of data.

A. Types of Data Requested

1. EPA requests paired influent and

effluent treatment data for each of the

technologies identified in the

technology options, as well as any

additional technologies applicable to

the treatment of MP&M waste waters.

This includes end-of-pipe treatment

technologies and in process treatment,

recycling, water reuse, or metal recovery

technologies. Submission of effluent

data only is not sufficient for full

analysis; the corresponding influent

data must be provided.

For submissions of paired influent

and effluent treatment data, a minimum

of four days of data are required for EPA

to assess variability. Submissions of

paired influent and effluent treatment

data should include: a process diagram

of the treatment system; treatment

chemical addition rates; sampling point

locations; sample collection dates;

influent and effluent flow rates for each

treatment unit during the sampling

period; sludge or waste oil generation

rates; a brief discussion of the treatment

technology sampled; and a list of unit

operations contributing to the sampled

wastestream. EPA requests data for

systems that are treating only process

waste water. Systems treating nonprocess waste water (e.g., sanitary waste

water or non-contact cooling water) will

not be evaluated by EPA. In addition to

data for the analytes discussed below,

data for total suspended solids (TSS)

and pH must be included with

submissions of treatment data. If

available, information on capital cost,

annual (operation and maintenance)

cost, and treatment capacity should be

included for each treatment unit within

the system.

2. EPA also requests flow, production,

and analytical data from MP&M unit

operations, rinses, and wet air pollution

control devices. Submissions of

analytical data for MP&M unit

operations and rinses should include a

process diagram of the unit operation; a

description of the purpose and

performance of the operation;

production data associated with the

sampling period; flow rates associated

with the sampling period (i.e.,

continuous discharge flow rates,

intermittent discharge rates and

frequencies, or volume of bath and time

of last discharge for stagnant baths);

sample type (grab or composite);

temperature and pH of each sample;

sample collection dates; known process

bath constituents; sampling point

locations; and, the volume, discharge

frequency, and destination of all process

waste water, waste oil, or sludge

generated by the unit operation.

Associated production data should be

provided in the following units: mass of

metal removed (for abrasive jet

machining, electrical discharge

machining, grinding, machining, and

plasma arc machining operations), in

standard cubic feet of air flow (for wet

air pollution control operations), or

surface area of parts processed (for all

other unit operations). Flow,

production, and analytical data should

all correspond to the same period of

time. When applicable, a description of

any pollution prevention technologies

used at the site for the unit operations,

including cost savings and pollution

reduction estimates should be provided.
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28273

B. Analytes Requested

EPA considered 342 metal, organic,

conventional, and other

nonconventional pollutant parameters

for regulation under the MP&M

Category. Based on analytical data

collected by the Agency, 69 pollutant

parameters were identified as MP&M

‘‘pollutants of concern’’. Complete lists

of pollutant parameters considered for

regulation and pollutants of concern (as

well as the criteria used to identify each

of these pollutant parameters) are

available in the Technical Development

Document for this proposal. The Agency

requests analytical data for any of the 69

pollutants of concern and for any other

pollutant parameters which commentors

believe are of concern in the MP&M

industry. TSS and pH data are requested

for all samples. For submissions of data

including organic pollutants, data for oil

and grease (O&G) is requested. Table 27

presents the EPA analytical methods for

these pollutants. Commentors should

use these methods or equivalent

methods for analyses, and should

document the method used for all data

submissions.

C. Quality Assurance/Quality Control

(QA/QC) Requirements

Today’s proposed regulations were

based on analytical data collected by

EPA using rigorous QA/QC checks.

These QA/QC checks include

procedures specified in each of the

analytical methods, as well as

procedures used for the MP&M

sampling program in accordance with

EPA sampling and analysis protocols.

The Agency requests that submissions

of analytical data include

documentation that QA/QC procedures

similar to those listed below were

observed.

EPA followed the QA/QC procedures

specified in the analytical methods

listed in Table 27. These QA/QC

procedures include sample preservation

and the use of method blanks, matrix

spikes, matrix spike duplicates,

laboratory duplicate samples, and Q

standard checks (e.g., continuing

calibration blanks). EPA requests that

sites provide detection limits for all

non-detected pollutants. EPA also

requests that composite samples be

collected for all flowing waste water

streams (except for analyses requiring

grab samples, such as oil and grease),

sites collect and analyze 10% field

duplicate samples to assess sampling

variability, and sites provide data for

equipment blanks for volatile organic

pollutants when automatic compositors

are used to collect samples.

TABLE 27.—EPA ANALYTICAL METHODS FOR USE WITH MP&M

Parameter EPA method Sample type

Metals ..................................................................................................... 1620 .......................................................................... Composite/Grab.

Volatile Organics .................................................................................... 1624 .......................................................................... Composite/Grab.

Semivolatile Organics ............................................................................ 1625 .......................................................................... Grab.

pH ........................................................................................................... 150.1 ......................................................................... Composite/Grab.

Total Dissolved Solids (TDS) ................................................................. 160.1 ......................................................................... Composite/Grab.

Total Suspended Solids (TSS) .............................................................. 160.2 ......................................................................... Composite/Grab.

Chloride, Fluoride, and Sulfate .............................................................. 300.0 or 325.2, 340.2, and 375.4 ............................. Composite/Grab.

Acidity ..................................................................................................... 305.1 ......................................................................... Composite/Grab.

Alkalinity ................................................................................................. 310.2 ......................................................................... Composite/Grab.

Cyanide, Total ........................................................................................ 335.2 ......................................................................... Grab.

Nitrogen, Ammonia ................................................................................ 350.1 ......................................................................... Composite/Grab.

Nitrogen, Total Kjeldahl .......................................................................... 351.2 ......................................................................... Composite/Grab.

Phosphorus, Total .................................................................................. 365.4 ......................................................................... Composite/Grab.

Chemical Oxygen Demand .................................................................... 410.1 or 410.2 ........................................................... Composite/Grab.

Oil and Grease, Total Recoverable ....................................................... 413.2 ......................................................................... Grab.

Phenolics, Total Recoverable ................................................................ 420.2 ......................................................................... Composite/Grab.

XXI. Unfunded Mandates Reform Act

Section 201 of the Unfunded

Mandates Reform Act of 1995

(‘‘Unfunded Mandates Act’’), signed

into law on March 22, 1995, requires

each agency, unless prohibited by law,

to assess the effects of federal

regulations on State, local, and tribal

governments and the private sector.

Under Section 202 of the Unfunded

Mandates Act, EPA must prepare an

unfunded mandate statement to

accompany any proposed rule where the

estimated costs to State, local, or tribal

governments, or to the private sector,

will be $100 million or more in any one

year. Under Section 205, EPA must

select the most cost-effective or least

burdensome alternative that achieves

the requirements, or explain why this

was not possible. Section 203 requires

EPA to establish a plan for informing

and advising any small governments

that may be significantly impacted by

the rule.

The unfunded mandate statement

under Section 202 must include: (1) a

citation of the statutory authority under

which the rule is proposed, (2) an

assessment of the costs and benefits of

the rule and the federal resources

available to defray the costs, (3) where

feasible, estimates of future compliance

costs and disproportionate impacts

upon particular geographic or social

segments of the nation or industry, (4)

where relevant, an estimate of the effect

on the national economy, and (5) a

description of EPA’s prior consultation

with State, local, and tribal officials.

Since this proposed rule is estimated

to impose costs to the private sector in

excess of $100 million, EPA has

prepared the following statement with

respect to budgetary impacts. EPA does

not expect that this rule will impose

significant costs on State, local, or tribal

governments; although EPA has taken

several steps to reduce the

administrative burden of this proposed

rule.

1. Statutory Authority

The statutory authority for this

rulemaking is identified and described

in Sections I and II of the preamble. As

required by Section 205 of the

Unfunded Mandates Act and as

discussed in Section IX of the preamble,

EPA has chosen to propose a rule that

is the most cost-effective alternative for

regulation of these sources that meets

the statutory requirements under the

Clean Water Act. EPA acknowledges

that the proposed regulation may not be

the least burdensome, but EPA believes

that the additional costs are justified

due to the additional pollutant removals

achieved.
28274 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

2. Costs and Benefits

The assessment of costs and benefits

for this rule, including the assessment of

costs and benefits to State, local, and

tribal governments, is discussed in the

Regulatory Impact Assessment for this

proposal and in Section XV of the

preamble.

3. Future and Disproportionate Costs

The Unfunded Mandates Act requires

that EPA estimate, where accurate

estimation is reasonably feasible, future

compliance costs imposed by the rule

and any disproportionate budgetary

effects. EPA’s estimates of the future

compliance costs of this rule are

discussed in the Regulatory Impact

Assessment for this proposal and in

Section XIV of the preamble.

EPA does not expect that there will be

any disproportionate budgetary effects

of the proposed rule on any particular

areas of the country, particular

governments or types of communities.

This is because the affected population

of MP&M facilities is distributed

throughout the country in settings from

urban to rural. The estimated annual

impact of this proposed rule on the

affected industry is $161 million

($1994) as discussed in Section XIV of

this preamble. A discussion of

community impacts is also included in

Section XIV. The annual administrative

burden on State and local governments

is estimated to be $1.9 to 3.2 million

($1994) as discussed in Section XIV.C.

of the preamble and in the Regulatory

Impact Assessment. The administrative

burden was estimated for State and local

governments combined due to the way

in which direct and indirect discharge

permits are administered. The impact

on tribal governments is expected to be

zero.

4. Effects on National Economy

The Unfunded Mandates Act requires

that the EPA estimate the effect of this

rule on the national economy where (1)

accurate estimates are feasible and (2)

the rule will have a ‘‘material’’ effect on

the economy. EPA’s estimates of the

impact of this proposal on the national

economy are described in Section XIV

of this preamble. The Federal resources

which are generally available for

financial assistance to States are

included in Section 106 of the Clean

Water Act.

5. Consultation With Government

Officials

The Unfunded Mandates Act requires

that EPA describe the extent of the

Agency’s prior consultation with

affected State, local, and tribal officials,

summarize the officials’ comments or

concerns, and summarize EPA’s

response to those comments or

concerns. In addition, Section 203 of the

Act requires that EPA develop a plan for

informing and advising small

governments that may be significantly

or uniquely impacted by a proposal.

In the development of this rule, EPA

has conducted over a dozen technical

presentations to explain the content of

the MP&M proposal. Included among

these presentations was a public

meeting held on February 23, 1994. Also

included among these presentations

were several meetings with State and

local governments. In summary, the

comments and concerns raised by

government officials had to do with the

potential administrative burden of this

proposed rule. EPA has addressed these

concerns by evaluating the

characteristics of the industry in order

to determine if the potential

administrative burden could be reduced

without significantly changing the

environmental benefits of the proposed

rule. After carefully evaluating the

number and size of MP&M facilities, the

estimated cost of compliance and the

estimated pollutant loadings, EPA

decided to exempt existing indirect

dischargers which discharge less than

one million gallons per year. This

addresses the concerns of State and

local governments by significantly

reducing the administrative burden

while continuing to cover the majority

of the pollutant loadings from this

industry. Small governments are not

significantly impacted by this rule as

discussed in Sections XIV and XV if this

preamble, and therefore no plan is

required.

Appendix A To The Preamble—

Abbreviation, Acronyms, and Other

Terms Used in This Notice

Act—The Clean Water Act

Agency—U.S. Environmental Protection

Agency

BAT—Best available technology

economically achievable, as defined

by section 304(b)(2)(B) of the Act.

BCT—Best conventional pollutant

control technology, as defined by

section 304(b)(4) of the Act.

BMP—Best management practices, as

defined by section 304(e) of the Act.

BPT—Best practicable control

technology currently available, as

defined by section 304(b)(1) of the

Act.

CAA—Clean Air Act (42 U.S.C. 7401 et.

seq., as amended inter alia by the

Clean Air Act Amendments of 1990

(Pub. L. 101–549, 104 stat. 2394).

Clean Water Act—The Federal Water

Pollution Control Act Amendments of

1972 (33 U.S.C. 1251 et seq.), as

amended by the Clean Water Act of

1977 (Pub. L. 95–217), and the Water

Quality Act of 1987 (Pub. L. 100–4).

Conventional Pollutants—Constituents

of waste water as determined by

section 304(a)(4) of the Act and the

regulations thereunder 40 CFR 401.16,

including, but not limited to,

pollutants classified as biochemical

oxygen demand, suspended solids, oil

and grease, fecal coliform, and pH.

CTG—Control Techniques Guideline

(applicable to NESHAPs)

DCP—Data Collection Portfolio (detailed

questionnaire for MP&M)

Direct Discharger—An industrial

discharger that introduces waste

water to a water of the United States

with or without treatment by the

discharger.

Effluent Limitation—A maximum

amount, per unit of time, production,

volume or other unit, of each specific

constituent of the effluent from an

existing point source that is subject to

limitation. Effluent limitations may be

expressed as a mass loading or as a

concentration in milligrams of

pollutant per liter discharged.

End-of-Pipe Treatment (EOP)—Refers to

those processes that treat a plant

waste stream for pollutant removal

prior to discharge.

HAP—Hazardous Air Pollutant

Indirect Discharger—An industrial

discharger that introduces waste

water into a publicly owned treatment

works.

In-Plant Control or Treatment

Technologies—Controls or measures

applied within the manufacturing

process to reduce or eliminate

pollutant and hydraulic loadings of

raw waste water. Typical in-plant

control measures include process

modification, instrumentation,

recovery of raw materials, solvents,

products or by-products, and water

recycle.

MDCP—Mini Data Collection Portfolio

(screener survey for MP&M)

MP&M—Metal Products and Machinery

point source category

NESHAP—National Emission Standards

for Hazardous Air Pollutants

MACT—Maximum Achievable Control

Technology (applicable to NESHAPs)

Nonconventional Pollutants—Pollutants

that have not been designated as

either conventional pollutants or

priority pollutants.

NPDES—National Pollutant Discharge

Elimination system, a Federal

Program requiring industry

dischargers, including municipalities,

to obtain permits to discharge

pollutants to the nation’s water, under

section 402 of the Act.

OCPSF—Organic chemicals, plastics,

and synthetic fibers manufacturing
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28275

point source category (40 CFR part

414).

POTW—Publicly owned treatment

works.

Priority Pollutants—The 126 pollutants

listed in 40 CFR part 423, appendix A.

PSES—Pretreatment Standards for

existing sources of indirect

discharges, under section 307(b) of

the Act.

PSNS—Pretreatment standards for new

sources of indirect discharges, under

sections 307 (b) and (c) of the Act.

RACT—Reasonably Available Control

Technology (applicable to NESHAPs)

SIC—Standards Industrial

Classification, a numerical

categorization scheme used by the

U.S. Department of Commerce to

denote segments of industry.

Technical Development Document—

Development Document for Effluent

Limitations Guidelines and Standards

for the Metal Products and Machinery

Phase I Point Source Category.

VOC—Volatile Organic Compound

List of Subjects

40 CFR Part 433

Environmental protection, Metals,

Waste treatment and disposal, Water

pollution control.

40 CFR Part 438

Environmental protection, Metals,

Water pollution control, Water

treatment and disposal.

40 CFR Part 464

Environmental protection, Metals,

Waste treatment and disposal, Water

pollution control.

Dated: March 31, 1995.

Carol M. Browner,

Administrator.

For the reasons set out in the

preamble, title 40, chapter I is proposed

to be amended as follows:

PART 433—[AMENDED]

1. The authority citation for part 433

continues to read as follows:

Authority: Secs. 301, 304(b), (c), (e), and

(g), 306(b) and (c), 307(b) and (c), 308 and

501 of the Clean Water Act (the Federal

Water Pollution Control Act Amendments of

1971, as amended by the Clean Water Act of

1977) (the ‘‘Act’’); 33 U.S.C. 1311, 1314(b) (c),

(e), and (g), 1316(b) and (c), 1317(b) and (c),

1318, and 1361; 86 Stat. 816, Pub. L. 92–500;

91 Stat. 1567, Pub. L. 95–217.

2. Section 433.10 is amended by

adding ‘‘Metal Products and Machinery

(40 CFR Part 438)’’ to the list in

paragraph (b) to read as follows:

§ 433.10 Applicability; description of the

metal finishing point source category.

* * * * *

(b) * * *

Metal Products and Machinery (40

CFR Part 438)

* * * * *

3. A new part 438 is proposed to be

added as follows:

PART 438—METAL PRODUCTS AND

MACHINERY POINT SOURCE

CATEGORY

Subpart A—Metal Products and Machinery

Phase I Category

Sec.

438.10 Applicability; description of the

Metal Products and Machinery Phase I

point source category.

438.11 Specialized definitions.

438.12 Monitoring Requirements

438.13 Effluent limitations representing the

degree of effluent reduction attainable by

applying the best practicable control

technology currently available (BPT).

438.14 Effluent limitations representing the

degree of effluent reduction attainable by

applying the best conventional pollutant

control technology (BCT).

438.15 Effluent limitations representing the

degree of effluent reduction attainable by

applying the best available technology

economically achievable (BAT).

438.16 Pretreatment standards for existing

sources (PSES).

438.17 New source performance standards

(NSPS).

438.18 Pretreatment standards for new

sources (PSNS).

Subpart B—Metal Products and Machinery

Phase II Category

438.20 [Reserved]

Authority: Secs. 301, 304, 306, 307, 308,

and 501 of the Clean Water Act (33 U.S.C.

1311, 1314, 1316, 1317, 1318, and 1361) and

42 U.S.C. 13101 et seq.

Subpart A—Metal Products and

Machinery Category

§ 438.10 Applicability; description of the

Metal Products and Machinery Phase I point

source category.

(a) Except as provided in paragraphs

(b), (c), and (d) of this section, the

provisions of this subpart apply to

process wastewater discharges from

plants or portions of plants within the

Metal Products and Machinery

(hereafter referred to as MP&M) Phase I

industries which manufacture, maintain

or rebuild finished metal parts, products

or machines from any basis metal.

(b) The following existing effluent

limitations and standards generally

apply to the production of semi-finished

products, although wastewater from

similar operations is generated within

MP&M Phase I. These part 438 limits

shall not apply in cases in which one or

more of the following regulations

specifically applies, nor in cases in

which either MP&M Phase I or one of

the following regulations could apply to

the wastewater discharge from the same

operations; in these cases, the following

regulations shall apply:

Iron and steel manufacturing (40 CFR Part

420)

Nonferrous metals manufacturing (40 CFR

Part 421)

Ferroalloy manufacturing (40 CFR Part 424)

Battery manufacturing (40 CFR Part 461)

Plastic molding and forming (40 CFR Part

463)

Metal molding and casting (40 CFR Part 464)

Coil coating (40 CFR Part 465)

Porcelain enameling (40 CFR Part 466)

Aluminum forming (40 CFR Part 467)

Copper forming (40 CFR Part 468)

Electrical and electronic components (40 CFR

Part 469)

Nonferrous metals forming and metal

powders (40 CFR Part 471)

(c) This subpart does not apply to

plants which manufacture, maintain or

rebuild finished metal parts, products or

machines only within MP&M Phase II

industries.

(d) This subpart does not apply to

existing indirect discharging surface

finishing job shops and independent

printed wiring board manufacturers

(which are covered by 40 CFR parts 413

and 433).

§ 438.11 Specialized definitions.

(a) The term semi-finished shall mean

mill products and other metal products

specifically covered by one of the

existing regulations listed in § 438.10

(b).

(b) The term finished shall mean

metal parts, products or machines

which are not specifically covered by

one of the existing regulations listed in

§ 438.10 (b).

(c) The term T, as in Cyanide, T, shall

mean total.

(d) The term surface finishing job

shop shall mean a facility which owns

not more than 50% (annual area basis)

of the materials undergoing surface

finishing operations.

(e) The term TSS shall mean total

suspended solids.

(f) The term MP&M Phase I industries

shall mean any one or more of the

following seven industries: aircraft,

aerospace, electronic equipment,

hardware, mobile industrial equipment,

ordnance, and stationary industrial

equipment. A list of typical products

within these seven industries is

included in Appendix A of this part. If

a plant generates wastewater from

operations performed in both MP&M

Phase I and MP&M Phase II industries

and the wastewater from both phases is

discharged to a combined outfall, then

the plant is considered MP&M Phase I

and the combined outfall is covered by

this subpart. If the plant segregates

Phase I wastewater from Phase II
28276 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

wastewater, and discharges these

wastewaters to separate outfalls, then

only the Phase I wastewater is covered

by this subpart.

(g) The term MP&M Phase II

industries shall mean any one or more

of the following eight industries: bus

and truck, household equipment,

instruments, motor vehicles, office

machines, railroad, ships and boats, and

precious and non-precious metals. A list

of typical products within these eight

industries is included in Appendix B of

this part.

(h) The term independent printed

wiring board manufacturer shall mean a

facility which manufactures printed

wiring boards (also referred to as

printed circuit boards) principally for

sale to other companies.

(i) The term plant or portion of a

plant is defined to include an activity,

facility, or mixed use facility that is

engaged in performing an MP&M-related

industrial function and either located in

a single building or located on a

contiguous parcel of property. For

purposes of this definition, mixed use

facilities are those that have a mixture

of non-related industrial, residential, or

office types of activities. Sources or

point sources located within the same

fence line or property boundary are not

necessarily considered contiguous.

(j) the terms source and point source

are defined as process wastewater

discharges from plants or portions of

plants.

§ 438.12 Monitoring requirements.

Self monitoring for cyanide must be

conducted after cyanide treatment and

before combining with other streams.

Alternatively, samples may be taken of

the final effluent, if the plant limitations

are adjusted based on the dilution ratio

of the cyanide waste stream flow to the

effluent flow.

§ 438.13 Effluent limitations representing

the degree of effluent reduction attainable

by applying the best practicable control

technology currently available (BPT).

(a) Except as provided in 40 CFR

125.30 through 125.32, any existing

point source subject to this subpart must

achieve discharges not exceeding the

quantity (mass) of pollutant determined

by multiplying the process wastewater

discharge flow subject to this subpart

times the concentration listed in Table

1 of this part.

(b) No user subject to the provisions

of this subpart shall augment the use of

process wastewater or otherwise dilute

the wastewater as a partial or total

substitute for adequate treatment to

achieve compliance with this limitation.

§ 438.14 Effluent limitations representing

the degree of effluent reduction attainable

by applying the best conventional pollutant

control technology (BCT).

(a) Except as provided in 40 CFR

125.30 through 125.32, any existing

point source subject to this subpart must

achieve discharges not exceeding the

quantity (mass) of pollutant determined

by multiplying the process wastewater

discharge flow subject to this subpart

times the concentration listed in Table

1 for oil & grease, TSS and pH.

(b) No user subject to the provisions

of this subpart shall augment the use of

process wastewater or otherwise dilute

the wastewater as a partial or total

substitute for adequate treatment to

achieve compliance with this limitation.

§ 438.15 Effluent limitations representing

the degree of effluent reduction attainable

by applying the best available technology

economically achievable (BAT).

(a) Except as provided in 40 CFR

125.30 through 125.32, any existing

point source subject to this subpart must

achieve discharges not exceeding the

quantity (mass) of pollutant determined

by multiplying the process wastewater

discharge flow subject to this subpart

times the concentration listed in Table

1 for all parameters except TSS and pH.

(b) No user subject to the provisions

of this subpart shall augment the use of

process wastewater or otherwise dilute

the wastewater as a partial or total

substitute for adequate treatment to

achieve compliance with this limitation.

(c) An existing source subject to this

subpart shall comply with the oil &

grease standard which serves as an

indicator for the organic pollutants

which have the potential to be present

in the wastewater.

§ 438.16 Pretreatment standards for

existing sources (PSES).

Except as provided in 40 CFR 403.7

through 403.13, any existing source

subject to this subpart that introduces

pollutants into a publicly owned

treatment works must comply with 40

CFR part 403 and by [3 years from date

the final rule is promulgated] and

achieve the following pretreatment

standards for existing sources (PSES):

(a) Any source discharging 1,000,000

gallons or more per calendar year of

MP&M process wastewater must achieve

discharges not exceeding the quantity

(mass) of pollutant determined by

multiplying the process wastewater

discharge flow subject to this subpart

times the concentration listed in Table

1 of this part for all parameters except

TSS and pH. If mass limitations have

not been developed as required, the

source shall achieve discharges not

exceeding the concentration limitations

listed in Table 1 for all parameters

except TSS and pH.

(b) Any source discharging less than

1,000,000 gallons per calendar year of

MP&M process wastewater is exempt

from this subpart.

(c) No user introducing wastewater

pollutants into a publicly owned

treatment works under the provisions of

this subpart shall augment the use of

process wastewater or otherwise dilute

the wastewater as a partial or total

substitute for adequate treatment to

achieve compliance with this section.

(d) An existing source subject to this

subpart shall comply with the oil &

grease standard which serves as an

indicator for the organic pollutants

which have the potential to be present

in the wastewater and which would

pass through the publicly owned

treatment works. Since oil and grease

serves as an indicator for organic

pollutants, POTW removal credits under

40 CFR 403.7 are not available for oil

and grease.

§ 438.17 New source performance

standards (NSPS).

(a) Any new source subject to this

subpart must achieve discharges not

exceeding the quantity (mass) of

pollutant determined by multiplying the

process wastewater discharge flow

subject to this subpart times the

concentration listed in Table 1 of this

part.

(b) No user subject to the provisions

of this subpart shall augment the use of

process wastewater or otherwise dilute

the wastewater as a partial or total

substitute for adequate treatment to

achieve compliance with this limitation.

§ 438.18 Pretreatment standards for new

sources (PSNS).

(a) Except as provided in 40 CFR

403.7, any new source subject to this

subpart that introduces pollutants into a

publicly owned treatment works must

comply with 40 CFR part 403 and

achieve discharges not exceeding the

quantity (mass) of pollutant determined

by multiplying the process wastewater

discharge flow subject to this subpart

times the concentration listed in Table

1 of this part for all parameters except

TSS and pH. If mass limitations have

not been developed as required, the

source shall achieve discharges not

exceeding the concentration limitations

listed in Table 1 of this part for all

parameters except TSS and pH.

(b) No user introducing wastewater

pollutants into a publicly owned

treatment works under the provisions of

this subpart shall augment the use of

process wastewater or otherwise dilute

the wastewater as a partial or total
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules 28277

substitute for adequate treatment to

achieve compliance with this section.

(c) A new source subject to this

subpart shall comply with the oil &

grease standard which serves as an

indicator for the organic pollutants

which have the potential to be present

in the wastewater and which would

pass through the publicly owned

treatment works. Since oil and grease

serves as an indicator for organic

pollutants, POTW removal credits under

40 CFR 403.7 are not available for oil

and grease.

Subpart B—Metal Products and

Machinery Phase II Category

§ 438.20 [Reserved]

TABLE 1 TO PART 438.—MP&M

CONCENTRATION LIMITATIONS

[Milligrams per liter (mg/l)]

Pollutant or pollutant

property

Maximum

for 1

day

Monthly average

shall

not exceed

Aluminum (T) .................... 1.4 1.0

Cadmium (T) ..................... 0.7 0.3

Chromium (T) .................... 0.3 0.2

Copper (T) ........................ 1.3 0.6

Iron (T) .............................. 2.4 1.3

Nickel (T) .......................... 1.1 0.5

Zinc (T) ............................. 0.8 0.4

Cyanide (T) ....................... 0.03 0.02

Oil & Grease ..................... 35 17

TSS ................................... 73 36

pH ..................................... (1) (1)

1Within 6.0 to 9.0.

Appendix A to Part 438—Typical

Products Within MP&M Phase I

Industries

Aerospace

Guided Missiles & Space Vehicle

Guided Missile & Space Vehicle Prop.

Other Space Vehicle & Missile Parts

Aircraft

Aircraft Frames Manufacturing

Aircraft Engines & Engine Parts

Aircraft Parts & Equipment

Airports, Flying Fields, & Services

Electronic Equipment

Telephone & Telegraph Apparatus

Radio & TV Communications Equipment

Communications Equipment

Electron Tubes

Electronic Capacitors

Electronic Coils & Transformers

Connectors for Electronic Applications

Electronic Components

Electric Lamps

Hardware

Cutlery

Hand & Edge Tools

Hand Saws & Saw Blades

Hardware

Screw Machine Products

Bolts, Nuts, Screws, Rivets & Washers

Metal Shipping Barrels, Drums Kegs, Pails

Iron & Steel Forgings

Crowns & Closures

Metal Stampings

Steel Springs

Wire Springs

Miscellaneous Fabricated Wire Products

Fasteners, Buttons, Needles & Pins

Fluid Power Valves & Hose Fittings

Valves & Pipe Fittings

Fabricated Pipe & Fabricated Pipe Fittings

Fabricated Metal Products

Machine Tools, Metal Cutting Types

Machine Tools, Metal Forming Types

Special Dies & Tools, Die Sets, Jigs, Etc.

Machine Tool Accessories & Measuring

Devices

Power Driven Hand Tools

Heating Equipment, Except Electric

Industrial Furnaces & Ovens

Fabricated Structural Metal

Fabricated Plate Work (Boiler Shops)

Sheet Metal Work

Architectural & Ornamental Metal Work

Prefabricated Metal Buildings & Components

Miscellaneous Metal Work

Mobile Industrial Equipment

Farm Machinery & Equipment

Garden Tractors & Lawn & Garden

Equipment

Construction Machinery & Equipment

Mining Machinery & Equipment, Except Oil

Field

Hoist, Industrial Cranes & Monorails

Industrial Trucks, Tractors, Trailers

Tanks & Tank Components

Ordnance

Small Arms Ammunition

Ammunition

Small Arms

Ordnance & Accessories

Stationary Industrial Equipment

Steam, Gas, Hydraulic Turbines, Generator

Units

Internal Combustion Engines

Oil Field Machinery & Equipment

Elevators & Moving Stairways

Conveyors & Conveying Equipment

Industrial Patterns

Rolling Mill Machinery & Equipment

Metal Working Machinery

Textile Machinery

Woodworking Machinery

Paper Industries Machinery

Printing Trades Machinery & Equipment

Food Product Machinery

Special Industry Machinery

Pumps & Pumping Equipment

Ball & Roller Bearings

Air & Gas Compressors

Blowers & Exhaust & Ventilation Fans

Packaging Machinery

Speed Changers, High Speed Drivers & Gears

Industrial Process Furnaces & Ovens

Mechanical Power Transmission Equipment

General Industrial Machinery

Automatic Vending Machines

Commercial Laundry Equipment

Refrigeration & Air & Heating Equipment

Measuring & Dispensing Pumps

Service Industry Machines

Fluid Power Cylinders & Actuators

Fluid Power Pumps & Motors

Scales & Balances, Except Laboratory

Industrial Machinery

Welding Apparatus

Transformers

Switchgear & Switchboard Apparatus

Motors & Generators

Relays & Industrial Controls

Electric Industrial Apparatus

Heavy Construction Equipment Rental

Equipment Rental & Leasing

Appendix B to Part 438—Typical

Products Within MP&M Phase II

Industries

Bus & Truck

Truck & Bus Bodies

Motor Vehicle Parts & Accessories

Truck Trailers

Local & Suburban Transit (Bus & subway)

Local Passenger. Trans. (Lim., Amb., Sight

See)

Intercity & Rural Highways (Buslines)

School Buses

Bus Terminal & Service Facilities

Local Trucking Without Storage

Trucking

Local Trucking With Storage

Courier Services, Except by Air

Freight Truck Terminals, W/ or W/O

Maintenance.

Truck Rental & Leasing, Without Drivers

Household Equipment

Household Cooking Equipment

Household Refrig. & Home & Farm Freezers

Household Laundry Equipment

Electric Housewares & Fans

Household Vacuum Cleaners

Household Appliances

Electric Lamps

Current-Carrying Wiring Devices

Noncurrent-Carrying Wiring Devices

Residential Electrical Lighting Fixtures

Commercial, Ind. & Inst. Elec. Lighting

Fixtures

Lighting Equipment

Radio & Television Sets Except Commn.

Types

Radio & Television Repair Shops

Refrig. & Air Cond. Serv. & Repair Shops

Instruments

Coating, Engraving, & Allied Services

Search & Navigation Equipment

Laboratory Apparatus & Furniture

Automatic Environmental Controls

Process Control Instruments

Fluid Meters & Counting Devices

Instruments to Measure Electricity

Analytical Instruments

Measuring & Controlling Devices

Optical Instruments & Lenses

Surgical & Medical Instruments & Apparatus

Orthopedic, Prosthetic, & Surgical Supplies

Dental Equipment & Supplies

Ophthalmic Goods

Watches, Clocks, Associated Devices & Parts

Pens, Mechanical Pencils, & Parts

Manufacturing Industries

Miscellaneous repair Shops & Related

Services

Motor Vehicle

Carburetors, Pistons Rings, Valves
28278 Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 / Proposed Rules

Vehicular Lighting Equipment

Electrical Equipment for Motor Vehicles

Motor Vehicle Parts & Accessories

Motorcycles

Miscellaneous Transportation Equipment

Automotive Stampings

Motor Vehicle & Automotive Bodies

Mobile Homes

Travel Trailers & Campers

Taxicabs

Automotive Equipment

Automobile Dealers (new & used)

Gasoline Service Stations

Recreational & Utility Trailer Dealers

Motorcycle Dealers

Auto. Dealers (Dunebuggy, Go-cart,

Snowmobile)

Passenger Car Rental

Passenger Car Leasing

Utility Trailer & Recreational Vehicle Rental

Top & Body Repair & Paint Shops

Auto Exhaust System Repair Shops

Automotive Glass Replacement Shops

Automotive Transmission Repair Shops

General Automotive Repair Shops

Automotive Repairs Shops

Automobile Service (includes Diag. & Insp.

Cntrs.)

Welding Shops (includes Automotive)

Office Machine

Electronic Computers

Computer Storage Devices

Computer Terminals

Computer Peripheral Equipment

Calculating & Accounting Equipment

Office Machines

Photographic Equipment & Supplies

Compute Rental & Leasing

Compute Maintenance & Repair

Computer Related Services

Electrical & Electronic Repair

Precious & Nonprecious Metals

Jewelry, Precious Metal

Silverware, Plated Ware, & Stainless

Jewelers’ Materials & Lapidary Work

Musical Instruments

Costume Jewelry

Railroad

Railcars, Railway Systems

Line-Haul Railroads

Switching & Terminal Stations

Ships and Boats

Ship Building & Repairing

Boat Building & Repairing

Marines

Deep Sea Domestic Transportation of Freight

Freight Transportation on the Great Lakes

Water Transportation of Freight

Deep Sea Passenger Transportation, Except

by Ferry

Water Passenger Transportation

Ferries

Towing & Tugboat Service

Water Transportation Services

PART 464—[AMENDED]

4. The authority citation for part 464

continues to read as follows:

Authority: Secs. 301, 304(b), (c), (e), and

(g), 306(b) and (c), 307, 308, and 501 of the

Clean Water Act (Federal Water Pollution

Control Act Amendments of 1972, as

amended by the Clean Water Act of 1977)

(the ‘‘Act’’); 33 U.S.C. 1311, 1314(b), (c), (e)

and (g), 1316(b) and (c), 1317 (b) and (c),

1318, and 1361; 86 Stat. 816, Pub. L. 92–500;

91 Stat. 1567, Pub. L. 95–217.

5. Section 464.02 is amended by

revising the last sentence of paragraphs

(a), (b), (c), and (d) to read as follows:

§ 464.02 General definitions.

* * * * *

(a) * * * Processing operations

following the cooling of castings not

covered under aluminum forming,

except for grinding scrubber operations

which are covered in this section, are

covered under the electroplating, metal

finishing, and metal products and

machinery point source categories (40

CFR parts 413, 433 and 438).

(b) * * * Except for grinding scrubber

operations which are covered in this

section, processing operations following

the cooling of castings are covered

under the electroplating, metal

finishing, and metal products and

machinery point source categories (40

CFR parts 413, 433 and 438).

(c) * * * Except for grinding scrubber

operations which are covered in this

section processing operations following

the cooling of castings are covered

under the electroplating, metal

finishing, and metal products and

machinery point source categories (40

CFR parts 413, 433 and 438).

(d) * * * Processing operations

following the cooling of castings not

covered under nonferrous metals

forming are covered under the

electroplating, metal finishing, and

metal products and machinery point

source categories (40 CFR parts 413, 433

and 438).

* * * * *

[FR Doc. 95–8885 Filed 5–26–95; 8:45 am]

BILLING CODE 6560-50-P