Document ID: EPA-HQ-OW-2004-0002-0949
Agency: epa
Document Type: Notice
Title: National Pollutant Discharge Elimination System Proposed Regulations to Establish Requirements for Cooling Water Intake Structures at Phase III Facilities; Notice of Availability
Posted Date: 2005-11-25T05:00Z

[Federal Register: November 25, 2005 (Volume 70, Number 226)]
[Proposed Rules]               
[Page 71057-71071]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25no05-17]                         

=======================================================================
-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 9, 122, 123, 124, and 125

[OW-2004-0002, FRL-8002-3]
RIN 2040-AD70

 
National Pollutant Discharge Elimination System Proposed 
Regulations To Establish Requirements for Cooling Water Intake 
Structures at Phase III Facilities; Notice of Data Availability

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of data availability.

-----------------------------------------------------------------------

SUMMARY: On November 24, 2004, EPA published proposed regulations to 
establish requirements for cooling water intake structures at Phase III 
facilities under section 316(b) of the Clean Water Act (CWA). EPA 
proposed the following three options for defining which existing 
facilities would be subject to uniform national requirements, based on 
the facility's design intake flow threshold and source waterbody type: 
The facility has a total design intake flow of 50 million gallons per 
day (MGD) or more, and withdraws from any waterbody; the facility has a 
total design intake flow of 200 MGD or more, and withdraws from any 
waterbody; or the facility has a total design intake flow of 100 MGD or 
more and withdraws specifically from an ocean, estuary, tidal river, or 
one of the Great Lakes. The proposed rule would also establish national 
section 316(b) requirements for new offshore oil and gas extraction 
facilities. This notice of data availability (NODA) summarizes 
significant data EPA received or collected since publication of the 
proposed rule and discusses how EPA may use this data in revising its 
analyses. EPA solicits public comment on the information presented in 
this notice and the record supporting this notice.

DATES: Comments on this notice of data availability must be received or 
postmarked on or before midnight December 27, 2005.

ADDRESSES: Comments may be submitted by mail addressed to Water Docket, 
Environmental Protection Agency, Mailcode: 4101T, 1200 Pennsylvania 
Ave., NW., Washington, DC, 20460, Attention Docket ID No OW-2004-0002. 
Comments may also be submitted electronically, or by hand delivery. 
Follow the detailed instructions as provided in Section B.1 of the 
SUPPLEMENTARY INFORMATION section to file comments electronically.

FOR FURTHER INFORMATION CONTACT: For additional technical information 
contact Paul Shriner at (202) 566-1076. For additional economic 
information contact Erik Helm at (202) 566-1066. For additional 
biological information contact Ashley Allen at (202) 566-1012. The e-
mail address for the above contacts is rule.316b@epa.gov.

SUPPLEMENTARY INFORMATION:

General Information

A. How Can I Get Copies of This Document and Other Related Information?

    1. Docket. EPA has established an official public docket for this 
action under Docket ID No. OW-2004-0002. The official public docket 
consists of the documents specifically referenced in this action, any 
public comments received, and other information related to this action. 
Although a part of the official docket, the public docket does not 
include Confidential Business Information (CBI) or other information 
whose disclosure is restricted by statute. The official public docket 
is the collection of materials that is available for public viewing at 
the Water Docket in the EPA Docket Center, (EPA/DC) EPA West, Room 
B102, 1301 Constitution Ave., NW., Washington, DC. The EPA Docket 
Center Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday 
through Friday, excluding legal holidays. The telephone number for the 
Public Reading Room is (202) 566-1744, and the telephone number for the 
Water Docket is (202) 566-2426.
    2. Electronic Access. You may access this Federal Register document 
electronically through the EPA Internet under the ``Federal Register'' 
listings at http://www.epa.gov/fedrgstr/.

    An electronic version of the public docket is available through 
EPA's electronic public docket and comment system, EPA Dockets. You may 
use EPA Dockets at http://www.epa.gov/edocket/ to submit or view public 

comments, access the index listing of the contents of the official 
public docket, and to access those documents in the public docket that 
are available electronically. Once in the system, select ``search,'' 
then key in the appropriate docket identification number.
    Certain types of information will not be placed in the EPA Dockets. 
Information claimed as CBI and other information whose disclosure is 
restricted by statute, which is not included in the official public 
docket, will not be available for public viewing in EPA's electronic 
public docket. EPA's policy is that copyrighted material will not be 
placed in EPA's electronic public docket but will be available only in 
printed, paper form in the official public docket. To the extent 
feasible, publicly available docket materials will be made available in 
EPA's electronic public docket. When a document is selected from the 
index list in EPA Dockets, the system will identify whether the 
document is available for viewing in EPA's electronic public docket. 
Although not all docket materials may be available electronically, you 
may still access any of the publicly available docket materials through 
the docket facility identified in Section A.1. EPA intends to work 
towards providing electronic access to all of the publicly available 
docket materials through EPA's electronic public docket.
    For public commenters, it is important to note that EPA's policy is 
that public comments, whether submitted electronically or in paper, 
will be made available for public viewing in EPA's electronic public 
docket as EPA receives them and without change, unless the comment 
contains copyrighted material, CBI, or other information whose 
disclosure is restricted by statute. When EPA

[[Page 71058]]

identifies a comment containing copyrighted material, EPA will provide 
a reference to that material in the version of the comment that is 
placed in EPA's electronic public docket. The entire printed comment, 
including the copyrighted material, will be available in the public 
docket.
    Public comments submitted on computer disks that are mailed or 
delivered to the docket will be transferred to EPA's electronic public 
docket. Public comments that are mailed or delivered to the Docket will 
be scanned and placed in EPA's electronic public docket. Where 
practical, physical objects will be photographed, and the photograph 
will be placed in EPA's electronic public docket along with a brief 
description written by the docket staff.

B. How and to Whom Do I Submit Comments?

    You may submit comments electronically, by mail, or through hand 
delivery/courier. To ensure proper receipt by EPA, identify the 
appropriate docket identification number in the subject line on the 
first page of your comment. Please ensure that your comments are 
submitted within the specified comment period. Comments received after 
the close of the comment period will be marked ``late.'' EPA is not 
required to consider these late comments, however, late comments may be 
considered if time permits. If you wish to submit CBI or information 
that is otherwise protected by statute, please follow the instructions 
in Section C. Do not use EPA Dockets or e-mail to submit CBI or 
information protected by statute.
    1. Electronically. If you submit an electronic comment as 
prescribed below, EPA recommends that you include your name, mailing 
address, and an e-mail address or other contact information in the body 
of your comment. Also include this contact information on the outside 
of any disk or CD-ROM you submit, and in any cover letter accompanying 
the disk or CD-ROM. This ensures that you can be identified as the 
submitter of the comment and allows EPA to contact you in case EPA 
cannot read your comment due to technical difficulties or needs further 
information on the substance of your comment. EPA's policy is that EPA 
will not edit your comment, and any identifying or contact information 
provided in the body of a comment will be included as part of the 
comment that is placed in the official public docket, and made 
available in EPA's electronic public docket. If EPA cannot read your 
comment due to technical difficulties and cannot contact you for 
clarification, EPA may not be able to consider your comment.
    i. EPA Dockets. Your use of EPA's electronic public docket to 
submit comments to EPA electronically is EPA's preferred method for 
receiving comments. Go directly to EPA Dockets at http://www.epa.gov/edocket
, and follow the online instructions for submitting comments. To 

access EPA's electronic public docket from the EPA Internet Home Page, 
select ``Information Sources,'' ``Dockets,'' and ``EPA Dockets.'' Once 
in the system, select ``search,'' and then key in Docket ID No. OW-
2004-0002. The system is an ``anonymous access'' system, which means 
EPA will not know your identity, e-mail address, or other contact 
information unless you provide it in the body of your comment.
    ii. E-mail. Comments may be sent by electronic mail (e-mail) to 
OW-Docket@epa.gov, Attention Docket ID No. OW-2004-0002. In contrast to 

EPA's electronic public docket, EPA's e-mail system is not an 
``anonymous access'' system. If you send an e-mail comment directly to 
the Docket without going through EPA's electronic public docket, EPA's 
e-mail system automatically captures your e-mail address. E-mail 
addresses that are automatically captured by EPA's e-mail system are 
included as part of the comment that is placed in the official public 
docket, and made available in EPA's electronic public docket.
    iii. Disk or CD ROM. You may submit comments on a disk or CD ROM 
that you mail to the mailing address identified in Section B.2. These 
electronic submissions will be accepted in WordPerfect or ASCII file 
format. Avoid the use of special characters and any form of encryption.
    2. By Mail. Send an original and three copies of your comments to 
the Water Docket, Environmental Protection Agency, Mailcode: 4101T, 
1200 Pennsylvania Ave., NW., Washington, DC, 20460, Attention Docket ID 
No OW-2004-0002.
    3. By Hand Delivery or Courier. Deliver your comments to: Water 
Docket in the EPA Docket Center, (EPA/DC) EPA West, Room B102, 1301 
Constitution Ave., NW., Washington, DC., Attention Docket ID No. OW-
2004-0002. Such deliveries are only accepted during the Docket's normal 
hours of operation as identified in Section A.1.

C. How Should I Submit CBI to the Agency?

    Do not submit information that you consider to be CBI 
electronically through EPA's electronic public docket or by e-mail. 
Send or deliver information identified as CBI only to the following 
address: Office of Science and Technology, Mailcode 4303T, U.S. 
Environmental Protection Agency, 1200 Pennsylvania Ave., NW., 
Washington, DC 20460, Attention Docket ID No. OW-2004-0002. You may 
claim information that you submit to EPA as CBI by marking any part or 
all of that information as CBI (if you submit CBI on disk or CD ROM, 
mark the outside of the disk or CD ROM as CBI and then identify 
electronically within the disk or CD ROM the specific information that 
is CBI). Information so marked will not be disclosed except in 
accordance with procedures set forth in 40 CFR Part 2.
    In addition to one complete version of the comment that includes 
any information claimed as CBI, a copy of the comment that does not 
contain the information claimed as CBI must be submitted for inclusion 
in the public docket and EPA's electronic public docket. If you submit 
the copy that does not contain CBI on disk or CD ROM, mark the outside 
of the disk or CD ROM clearly that it does not contain CBI. Information 
not marked as CBI will be included in the public docket and EPA's 
electronic public docket without prior notice. If you have any 
questions about CBI or the procedures for claiming CBI, please consult 
the person identified in the FOR FURTHER INFORMATION CONTACT section.

D. What Should I Consider as I Prepare My Comments for EPA?

    You may find the following suggestions helpful for preparing your 
comments:

    1. Explain your views as clearly as possible.
    2. Describe any assumptions that you used.
    3. Provide any technical information and/or data you used that 
support your views.
    4. If you estimate potential burden or costs, explain how you 
arrived at your estimate.
    5. Provide specific examples to illustrate your concerns.
    6. Offer alternatives.
    7. Make sure to submit your comments by the comment period deadline 
identified.
    8. To ensure proper receipt by EPA, identify the appropriate docket 
identification number in the subject line on the first page of your 
response. It would also be helpful if you provided the name, date, and 
Federal Register citation related to your comments.

Table of Contents

I. Purpose of this Notice
II. Environmental Impacts

[[Page 71059]]

III. Engineering Costing Revisions
IV. Economic Impact
V. Benefits

I. Purpose of This Notice

    This notice presents a summary of significant data EPA has 
received, collected, or developed since proposal and a discussion of 
how EPA is considering using these data in revised analyses supporting 
the final rule.
    Section II of this notice discusses additional data about the 
environmental impacts associated with cooling water intake structures 
at facilities potentially subject to regulation under Phase III. This 
includes data obtained from the National Oceanic and Atmospheric 
Administration (NOAA), which characterize the nature and abundance of 
fish and shellfish in the vicinity of offshore oil and gas extraction 
facilities in the Gulf of Mexico potentially subject to regulation 
under Phase III. It also includes data extracted during EPA's review of 
additional cooling water intake structure impact studies relevant to 
Phase III.
    This notice also discusses EPA's revision of certain elements of 
the proposed Phase III rule cost estimates and presents the revised 
costing information. This includes revisions to the Phase III cost 
development methodology (i.e., cost-test tool) and the data inputs to 
this methodology, which are discussed in more detail in section III of 
today's notice.
    For the proposed regulation, EPA conducted an economic analysis of 
four major categories of manufacturers potentially subject to 
regulation under Phase III: paper and allied products, chemical and 
allied products, petroleum and coal products, and primary metals. These 
manufacturing categories, combined with steam electric facilities, 
represent 99 percent of cooling water use by all existing facilities 
potentially subject to regulation under section 316(b). Therefore, all 
other existing manufacturing facilities were grouped together in 
``other industries.'' EPA has now revised its economic impact analysis 
for these ``other industries,'' to better capture the food and kindred 
products sector, which represents the next largest user of cooling 
water among the ``other industries.'' The updated technology modules, 
costs, and economic analyses, including these additional industrial 
categories, are not anticipated to significantly affect the proposed 
benefits analyses. However, EPA has made minor adjustments to the 
benefits analysis through use of the population matrix fish model 
discussed at proposal (69 FR 68510), which has been peer reviewed 
subsequent to publication of the proposed rule. Data and adjustments to 
the economic impact and benefits analyses are discussed in sections IV 
and V of today's notice, respectively.
    EPA solicits public comment on the information presented in this 
notice and the record supporting this notice.

II. Environmental Impacts

    For today's NODA, EPA analyzed additional data on the regions in 
which offshore oil and gas extraction facilities operate in order to 
better characterize the potential for entrainment of ichthyoplankton 
(planktonic egg and larval life stages of fish) by these facilities. 
Offshore oil and gas extraction facilities operate off the coasts of 
California and Alaska and in the Gulf of Mexico. Most activity takes 
place in the Gulf of Mexico region (see Phase III proposed TDD; DCN 7-
0004, document ID OW-2004-0002-0027, pp. 3-130 to 3-148).
    Because planktonic organisms have limited swimming ability, those 
present in offshore regions where oil and gas activities take place are 
at risk of entrainment by cooling water intake structures at offshore 
oil and gas facilities. EPA obtained data on densities of 
ichthyoplankton in the Gulf of Mexico from the Southeast Area 
Monitoring and Assessment Program (SEAMAP).\1\ This long-term sampling 
program collects information on the density of fish larvae and eggs 
throughout the Gulf of Mexico.
---------------------------------------------------------------------------

    \1\ Adam Rettig and Blaine Snyder, Tetra Tech, Inc. Memorandum 
to Ashley Allen, EPA. A summary of ichthyoplankton presence and 
abundance in the Gulf of Mexico, as part of an assessment of the 
potential for entrainment by offshore oil and gas facilities. DCN 8-
5220. Document ID OW-2004-0002-951.
---------------------------------------------------------------------------

    EPA analyzed the SEAMAP data to determine average ichthyoplankton 
densities in the Gulf of Mexico for the available sampling period 
(1982-2003). Actual conditions at any one location and at any one time 
vary from this average. EPA's analysis of the SEAMAP data indicates 
that ichthyoplankton occur throughout the Gulf of Mexico. On average, 
densities are highest at sampling stations in the shallower regions of 
the Gulf of Mexico and lowest at sampling stations in the deepest 
regions. Average densities are greater than 450 organisms/100 m\3\ at 
sampling stations in waters less than 50 meters deep. Average densities 
gradually decrease to 100 organisms/100 m\3\ as sampling station depth-
at-location increases to 150 meters. At stations in waters greater than 
150 meters deep, densities are relatively uniform and fall between 25 
organisms/100 m\3\ and 100 organisms/100 m\3\.
    The wide range of ichthyoplankton densities seen in the offshore 
Gulf of Mexico region falls within the range of ichthyoplankton 
densities seen in freshwater and coastal water bodies in coastal and 
inland regions of the United States.\2\ Over 600 different fish taxa 
were identified in the SEAMAP samples, including species of commercial 
and recreational utility. Spawning events occur at all times of the 
year in the Gulf of Mexico, with different species typically spawning 
at a time of year particular to that species.\3\
---------------------------------------------------------------------------

    \2\ A. L. Allen (EPA). Memorandum to EPA Docket OW-2004-0002. 
Information on Ichthyoplankton Densities in Various Aquatic 
Ecosystems in the United States. DCN 8-5240.
    \3\ Ditty, J.G. Seasonality and depth distribution of larval 
fishes in the northern Gulf of Mexico above latitude 26 (degrees) 00 
(minutes) N. DCN 7-0013A03. Document ID OW-2004-0002-0174.
---------------------------------------------------------------------------

    In the area surrounding offshore oil and gas extraction facilities 
off the California coast, the California Cooperative Oceanic Fisheries 
Investigations (CalCOFI) program has gathered data on densities of 
ichthyoplankton and other organisms. According to the CalCOFI and other 
research programs, a number of fish and shellfish species, including 
species of commercial and recreational value, are known to live and 
spawn in this region.\4\ EPA does not know of similarly extensive 
sampling programs for the Alaska offshore region. However, a number of 
fish and shellfish species, including species of commercial and 
recreational value, are known from various research programs to live 
and spawn in the offshore regions of Alaska where oil and gas 
activities currently take place or may take place in the future. The 
eggs and larvae of many species found in the offshore regions of 
California and Alaska are planktonic and could therefore also be 
vulnerable to entrainment by a facility's cooling water intake 
structure operating in these regions. Larger life stages (e.g. adults 
and juveniles) could be vulnerable to impingement. EPA believes these 
data indicate the potential for entrainment and impingement from 
cooling water intake structures at oil and gas facilities operating in 
offshore regions.
---------------------------------------------------------------------------

    \4\ A.L. Allen (EPA). Memorandum to EPA Docket OW-2004-0002. 
Information on Fish Species that Live and Spawn off the Coasts of 
Alaska and California in the Vicinity of Offshore Oil and Gas 
Production Areas. DCN 8-5260.
---------------------------------------------------------------------------

    EPA also continued to collect impingement and entrainment studies 
from Phase II and Phase III facilities that indicated in their industry 
questionnaire that they had conducted such studies (see 69 FR 68458). 
Since

[[Page 71060]]

proposal, EPA has collected 12 additional studies containing data that 
can be used for the national environmental assessment.\5\ (See the 
Regional Benefits Assessment for the Proposed Section 316(b) Rule for 
Phase III Facilities [EPA-821-R-04-017], p. A1-3 for a description of 
data needs and quality criteria for the environmental assessment.) 
Though EPA has not fully evaluated the data in these studies, the data 
from these studies appear to be consistent with data from previously 
collected studies.
---------------------------------------------------------------------------

    \5\ ``Summary Descriptions of Facilities with Impingement and 
Entrainment Studies Collected Since Proposal of the Section 316(b) 
Phase III Rule'' provides a summary of these studies supplementing 
the Regional Benefits document DCN 8-5282. These 12 studies are also 
in the record for today's NODA.
---------------------------------------------------------------------------

III. Engineering Costing Revisions

    As described in the preamble for the Phase III proposed rule (69 FR 
68498), EPA used a spreadsheet program called the ``cost-test tool'' to 
estimate engineering costs for model facilities. In contrast to Phase 
II, EPA does not have facility-level data for all potentially regulated 
facilities, and is therefore conducting the analysis using a model 
facility approach. Based on a series of data inputs, such as cooling 
system type, waterbody type, intake location, design intake flow (DIF), 
technology in-place, and through-screen velocity, the cost-test tool 
determines one of two possible performance expectations: (1) 
Impingement requirements only, or (2) both impingement and entrainment 
requirements.\6\ The cost-test tool then determines a compliance 
response for each intake at a model facility and assigns one of 12 
technology modules as the best-performing technology for that model 
intake. Cost estimates are derived through a series of computations 
that apply facility-specific data to the selected technology module. 
Cost outputs include capital costs, incremental operation and 
maintenance (O&M) costs, and installation downtime (in weeks) where 
appropriate (69 FR 68498). These model facility costs are then weighted 
and summed to provide national technology cost estimates for the 
proposal.
---------------------------------------------------------------------------

    \6\ Input parameters for the cost-test tool are defined and 
discussed in the Proposed 316(b) Phase III Technical Development 
Document, Section 5 (DCN 7-0004). The decision tree used to apply 
technology cost modules is also detailed in the TDD.
---------------------------------------------------------------------------

    For today's NODA, EPA's analyses reflect updated data inputs to the 
cost-test tool. In a few cases, EPA has provided technical corrections 
to certain data inputs. EPA has revised the capital costs, the annual 
O&M costs, and any monitoring and study costs correspondingly. 
Additionally, EPA conducted a sensitivity analysis using two different 
intake flow values to estimate engineering compliance costs.
    Technical corrections to the cost-test tool and the results of the 
intake flow analyses are discussed below.\7\ Costs were revised for 149 
of the 155 facilities (weighted value) potentially subject to the Phase 
III regulations.\8\ In aggregate, the national technology capital costs 
decreased by approximately 10% from the capital costs at proposal and 
O&M costs decreased by approximately 38%.
---------------------------------------------------------------------------

    \7\ See Revisions for Phase III Compliance Cost Estimates (DCN 
8-6600) for a detailed discussion.
    \8\ For the NODA, revisions were made to the capital costs, O&M 
costs, and downtime costs. Costs increased for some model 
facilities, and decreased for others. In some cases, only one of the 
three cost categories changed for a model facility, but in many 
cases, revisions were made in all three categories.
---------------------------------------------------------------------------

A. Corrections to Cost-Test Tool Data Inputs

    Since the publication of the proposed rule, EPA reviewed elements 
of the survey database for Phase III facilities for technical accuracy. 
These data serve as model facility inputs to the cost-test tool. 
Today's NODA reports the outcome of this review. EPA found a few 
inconsistencies and checked them against the original data reported in 
a given facility's 316(b) survey. Most inconsistencies were identified 
in the following fields of the cost-test tool:
     Technology in-place (the current technology at the 
facility);
     Intake water depth and intake well depth;
     Through-screen velocity; and
     Design intake flow (DIF).
    For technology in-place, intake water depth and intake well depth, 
and through-screen velocity, EPA corrected data inputs that were 
incorrectly interpreted for the cost-test tool in the proposed rule 
analysis. To do so, EPA reviewed 316(b) survey responses and written 
comments submitted with the survey to ensure that the correct 
parameters were identified and input into the cost-test tool. EPA also 
reviewed the facility-level data for DIF and found that some model 
facilities included emergency intake flows in their calculation of DIF. 
These facilities' costs were potentially overstated, and the costs were 
adjusted to remove emergency intakes and emergency intake flows. Some 
facilities also reported more than one technology in-place and also 
operate more than one intake, indicating that the facility has two 
distinct types of intake structure (e.g., a facility may have a 
shoreline intake and a submerged offshore intake). The costs for these 
``split'' intakes are now generated separately for each intake. The 
corrected values for DIF (``corrected DIF'' or ``revised DIF'') were 
subsequently used in the cost tool to calculate facility costs.
    Other corrections were made to the canal length for certain model 
facilities. Additionally, adjustments were made to model facilities to 
account for multiple intakes with unique characteristics, e.g., model 
facilities with intakes withdrawing from different waterbody types, 
model facilities with both shoreline and submerged intakes, and model 
facilities with intake velocities less than and greater than 0.5 foot 
per second (fps). These model facilities' costs were potentially 
overstated at proposal, as they included costs of technology modules 
for the model facilities' total flows rather than just those intakes 
needing technology modules.
    EPA also reviewed the calculation of O&M costs for all scenarios 
and revised costs to ensure that all incremental variable O&M costs 
were based on the actual intake flow (AIF). For the proposal, EPA used 
AIF for some variable O&M costs and DIF for others. EPA previously 
noted that the AIF is, on average, less than half of the total DIF (69 
FR 68460). EPA believes that using AIF for all cost modules is more 
appropriate for use in estimating technology O&M costs since the AIF 
will more accurately capture periods in which screens are not required 
to be operated as long or backwashed as frequently. Using the AIF more 
accurately reflects any incremental costs associated with reductions in 
power demand, wear on the system, and operator labor hours. Since AIF 
is on average less than half of the DIF, incremental O&M costs based on 
DIF tend to overstate costs.
    EPA also revised the baseline O&M costs for existing technologies 
for all technology modules except modules 5 (fish barrier net) and 8 
(add velocity cap). In doing so, EPA accounted for O&M costs currently 
borne by facilities to maintain any existing technologies, and only 
calculated the incremental baseline O&M costs for a new technology (as 
required by the rule). Modules 5 and 8 remain unchanged, as any 
existing technologies would likely remain in place after a new 
technology is installed as a result of the regulations. For all other 
modules, the existing technology would be removed and replaced by a new 
technology. In one additional case, EPA failed to account for a model 
facility's baseline O&M costs. In this case, EPA has now included the 
baseline O&M costs, and the model facility's costs were corrected

[[Page 71061]]

to reflect only the incremental O&M costs.
    The corrections to the engineering costs also resulted in changes 
to some of the pilot study costs estimated for the Information 
Collection Request (ICR).

B. Installation Downtime

    For the analysis supporting the proposal, installation downtime 
(the amount of time that a facility may need to shut down due to the 
installation of an impingement and/or entrainment technology) was 
estimated using EPA's Phase II modeling methodology (see Phase II 
Technical Development Document DCN 6-0004). This approach primarily 
presumes that the facility would need to shut down operations 
completely to retrofit an intake to either add a larger intake or 
relocate an intake to be submerged offshore. Although this is true for 
most electric generators, manufacturing facilities may have greater 
flexibility regarding operation of various production operations and 
cooling water requirements.\9\ Alternate electricity sources may be 
available or other intakes with sufficient excess capacity may be 
available for use during construction of a new intake technology. 
Therefore, EPA believes that the assumptions used for Phase II 
facilities may be overly conservative for Phase III model facilities 
and may tend to overestimate downtime potentially incurred by Phase III 
model facilities and the associated lost revenue.
---------------------------------------------------------------------------

    \9\ Id.
---------------------------------------------------------------------------

    Since the proposal, EPA has contacted several manufacturing 
facilities to verify the technology in-place, and has collected 
additional vendor and consultant data to update the downtime 
estimates.\10\ Based on this information, EPA corrected DIF values and 
revised cost module allocations for some model facilities, reduced 
downtime estimates by two weeks for technology modules 3, 4, 7, 12, and 
14 (see exhibit 5-23 of the proposed Development Document DCN 6-0004), 
and considered each intake at those model facilities with multiple 
intakes separately. These activities resulted in significant reductions 
in the need for any downtime at some facilities, and reduced downtime 
estimates for others. The revised installation downtime estimates are 
presented below for the three regulatory options and compared with 
values presented at proposal.
---------------------------------------------------------------------------

    \10\ See Downtime Duration Input and Analysis of Manufacturing 
Facilities (DCN 8-6601).

                             Exhibit III-1.--Revised Installation Downtime Estimates
----------------------------------------------------------------------------------------------------------------
                                     National Net Downtime Estimates (Weeks)
-----------------------------------------------------------------------------------------------------------------
                           50 MGD all                                 100 MGD certain           200 MGD all
-----------------------------------------------------------------       waterbodies      -----------------------
                                                                 ------------------------
                      Proposal                           NODA      Proposal      NODA      Proposal      NODA
----------------------------------------------------------------------------------------------------------------
104.................................................         55          16           2          28          17
----------------------------------------------------------------------------------------------------------------

For Phase III model facilities with multiple intakes, downtime 
estimates remain at zero for those facilities with shoreline intakes 
that are not dedicated intakes, as discussed in the proposal. Using the 
approach presented in today's NODA, and applying the model facilities' 
weights to achieve a national estimate, downtime estimates would be 
reduced by 49 weeks, 14 weeks, and 11 weeks, respectively, for the 
three regulatory options (50 MGD-All, 100 MGD Certain Waterbodies, and 
200 MGD-All, weighted values).
    EPA is soliciting comments on this approach to calculating 
installation downtime for Phase III facilities. EPA presents the 
revised estimates of downtime costs in Section IV.B. Exhibit IV-4 of 
this notice.

C. Use of Alternate Intake Flow Data to Estimate Costs

    For the proposed rule, EPA used the DIF to estimate all engineering 
compliance costs. The DIF is typically established prior to the design 
phase of construction and is estimated based on the maximum potential 
flow volume requirement for that facility. As stated previously, 
facilities rarely operate at flows close to the maximum DIF, and 
several commenters on the Phase III proposal stated that this 
methodology may have overestimated costs for the Phase III rulemaking.
    Several facilities commented that for older facilities, especially 
those that have implemented flow reduction measures, the plant's 
original DIF may be significantly higher than what is required under 
normal operations today. The costs developed for the proposed rule 
reflected the entire DIF as originally reported by the facility. EPA 
believes this may have resulted in overestimating flow for costing 
purposes. For example, EPA's costs should exclude technology retrofits 
to those structures where the intakes and/or pump houses have been 
permanently taken out of service. However, EPA is not able to identify 
all cases where a facility's reported DIF is significantly higher than 
the plant's current maximum intake flow or ``MRIF.'' To assess the 
impact of using DIF in the cost analysis, EPA conducted a sensitivity 
analysis using the three different intake flow values: The DIF with the 
corrections noted above in Section III.A. (``corrected DIF''); the AIF; 
and the MRIF.\11\ The AIF is calculated as the three-year average 
(1996-1998) of intake flow volume reported on the 316(b) surveys. The 
MRIF is calculated as the three-year average (also 1996-1998) of the 
maximum reported daily intake flow reported on the 316(b) surveys.\12\ 
Estimated engineering compliance costs for the three flow values are 
presented in Section IV.B, Exhibit IV-7 for each proposed option (50 
MGD all, 200 MGD all, and 100 MGD certain waterbodies).\13\
---------------------------------------------------------------------------

    \11\ See Revisions for Phase III Compliance Cost Estimates (DCN 
8-6600) for a detailed discussion.
    \12\ Where MRIF values were not provided on the 316(b) survey, 
EPA imputed the values from the reported AIF.
    \13\ See DCNs 8-6608A, 8-6608B, and 8-6608C.
---------------------------------------------------------------------------

    As part of the sensitivity analysis, installation downtime 
estimates were also developed using the AIF and the MRIF values and are 
presented in Exhibit III-2.

     Exhibit III-2.--Estimated National Installation Downtime Using
                        Alternative Intake Flows
------------------------------------------------------------------------
                                           Net downtime (weeks) for NODA
                                                     (weighted)
                                          ------------------------------
         Intake flow alternative                      100 MGD
                                            50 MGD    certain    200 MGD
                                             all    waterbodies    all
------------------------------------------------------------------------
Corrected DIF............................       55           2        17
AIF......................................       54           2        16
MRIF.....................................       54           2        16
------------------------------------------------------------------------

[[Page 71062]]

    EPA acknowledges that using DIF to estimate engineering capital 
costs may overestimate costs for some facilities, but believes that DIF 
provides the best margin of safety for periods of peak flows and allows 
for growth of future operations. EPA also believes that using the AIF 
or MRIF flows as the design basis for capital costs is not appropriate 
since many manufacturing facilities have flow requirements that vary 
greatly over time. Using the AIF may result in technologies being 
substantially undersized during periods of peak flow requirements, thus 
limiting the proper function of the technology. For example, intake 
screens are sized based on an acceptable through-screen velocity; when 
the actual flow exceeds the AIF, the performance of the technology 
suffers and greater impingement and entrainment may result. EPA also 
reviewed survey data that showed the MRIF exceeding the DIF in some 
extreme cases; in these instances, a technology sized for the MRIF may 
not be adequately protective. For these reasons, EPA intends to use the 
corrected DIF values in developing engineering capital costs for the 
final rule. EPA solicits comments on this approach.

D. Consideration of Operating Time

    Under the Phase II rule, facilities with a capacity utilization 
rate less than 15 percent are afforded reduced regulatory requirements, 
i.e., impingement mortality only regardless of waterbody type or DIF. 
Capacity utilization rate is defined as ``the ratio between the average 
annual net generation of power by the facility (in Megawatt hours 
(MWh)) and the total net capability of the facility to generate power 
(in MW) multiplied by the number of hours during a year'' (69 FR 
41684). In the proposed rule for Phase III, EPA solicited comments on 
an analogous approach for manufacturing facilities (69 FR 68484). No 
comments were received that reflected a specific approach; however, 
several commenters noted that reductions in flow or sporadic intake use 
should be addressed in the final requirements. In today's NODA, EPA is 
considering using a threshold of fewer than 60 days of operation for 
manufacturing facilities for reduced regulatory requirements.\14\ The 
60 day value was approximated as 15 percent of 365 days. For facilities 
with intakes operating fewer than 60 days per year, the intake would 
only be subject to impingement mortality requirements similar to those 
requirements for a Phase II facility operating at less than 15 percent 
capacity utilization rate. EPA solicits comments on this approach.
---------------------------------------------------------------------------

    \14\ Meadows, K. Memo to P. Shriner, EPA RE: Estimates of 
Operating Days for Phase III Facilities. DCN 8-6604.
---------------------------------------------------------------------------

IV. Economic Impact

    In this section of today's NODA, EPA first describes additional 
analyses that were undertaken for the ``Other Industries,'' which, as 
described at proposal, are industries in addition to the electric power 
industry and the Primary Manufacturing Industries that are potentially 
within the scope of the section 316(b) regulation. Second, EPA reviews 
an alternative concept for valuing the social cost of installation 
downtime. Third, EPA presents revised estimates of the social cost of 
compliance based on the revisions to the engineering cost analysis for 
regulatory compliance, as discussed in Section III, above.

A. Additional Analyses for the Other Industries

    As described in the proposal, EPA framed its initial analysis and 
data-gathering for the proposed Phase III rule on the electric power 
industry (facilities with design intake flow of less than 50 MGD) and 
four manufacturing industries: Paper, Chemicals, Petroleum, and Primary 
Metals, (the ``Primary Manufacturing Industries''). EPA focused on 
these industrial categories because they are cooling-water-intensive, 
and EPA therefore expected a substantial number of facilities in these 
categories would potentially be subject to the proposed regulation. 
Collectively, this target population was estimated to generate 99 
percent of the cooling water in the nation (see 69 FR 68457). Because 
other industries contribute relatively little cooling water generation, 
EPA excluded them from the target population for purposes of data 
collection activities.
    From a list of facilities in the target population, EPA selected a 
statistical sample to receive a questionnaire. Selecting facilities in 
this manner allows statistical inferences to be made about all eligible 
facilities in the target population, including those that did not 
respond or did not receive the questionnaire. When EPA received the 
responses, it found a few (22) questionnaires had been completed by 
facilities that were not part of the target population for the 
questionnaire. However, EPA determined that the 22 facilities may be 
subject to the rule because their operations include cooling water 
usage. For this reason, EPA retained the data and considered them on a 
facility-level basis in the impact analysis of the proposed rule. EPA 
performed a less detailed assessment of the economic circumstances in 
terms of the industries' ability to comply with the proposed Phase III 
regulation without material economic/financial impact. In its analysis 
at proposal, EPA found that none of the 22 facilities would be expected 
to incur an adverse economic impact from compliance with any of the 
proposed regulatory options. EPA proposed to extrapolate these findings 
to all ``other'' industries, because the associated (``other'') 
industries collectively contribute one percent or less of the cooling 
water usage, and therefore EPA believes there would be few, if any, 
additional potentially regulated facilities in the ``other'' 
industries. Comments on the proposal suggested that EPA should consider 
the impacts of the Other Industries, not just the facilities 
themselves.
    Since the proposal, EPA has continued to investigate these 
facilities and the Other Industries more generally to increase its 
understanding of the potential impact of the 316(b) regulation on such 
industries. These efforts include:
    1. A comparative analysis of cooling water use and compliance cost 
for the Other Industries and Primary Manufacturing Industries 
facilities. This analysis considered several normalized measures of 
cooling water use and compliance cost for facilities in the Other 
Industries and Primary Manufacturing Industries.\15\
---------------------------------------------------------------------------

    \15\ See Statistical Analysis of Other Industries and Primary 
Manufacturing Industries Facility Data, DCN 8-2502 and Evaluation of 
Similarities Between Intakes at Phase III Food and Kindred Products 
Facilities and Other Phase III Manufacturers; DCN8-6607.
---------------------------------------------------------------------------

    2. Preparation of a detailed industry profile and assessment of 
business conditions and outlook for the Food and Kindred Products 
industry. EPA chose this industry for additional analysis because it 
submitted over half (12) of the 22 Other Industries questionnaires that 
EPA received and because it is the next largest user of cooling water, 
after the electric power industry and the Primary Manufacturing 
Industries, as reported in the Census of Manufacturers reports of 
cooling water usage.\16\ None of the twelve facilities analyzed are 
expected to experience financial stress as a result of any of the 
proposed Phase III options.
---------------------------------------------------------------------------

    \16\ See Profile of Food and Kindred Products Industry (SIC 20), 
DCN 8-2500.
---------------------------------------------------------------------------

    3. Development of a basis for extrapolating results from the 
analysis of subset of the Food and Kindred Products industry facilities 
to the

[[Page 71063]]

broader population of facilities in the industry. In addition to 
preparing an economic profile for the Food and Kindred Products 
industry, EPA also sought to develop a method for extrapolating the 
findings from the analysis of the 12 individual Food and Kindred 
Products facilities to the broader population of facilities in the 
industry.\17\ EPA considered an ex-post-stratification approach to 
develop sample weights for facilities in the industry, but EPA 
concluded that sufficient data were not available to develop reliable 
sample weights by this method. As an alternative, less rigorous 
approach, EPA also considered extrapolating facility results to the 
broader population based on the approximate fraction of total cooling 
water use in the Food and Kindred Products industry represented by the 
12 facilities from which EPA received questionnaires. This analysis 
indicated that these facilities account for approximately 32 percent of 
estimated total cooling water usage in the Food and Kindred Products 
industry at the time of EPA's survey, which, in turn, would imply an 
extrapolation multiplier of 3.11. This concept of extrapolation assumes 
that compliance cost, facility counts, and other regulatory impact 
measures are directly proportional to cooling water usage, as 
represented by the 12 facilities, and thus can be scaled to the total 
Food and Kindred Products industry on this basis. Of these 12 Food and 
Kindred Products facilities, 3 reported design intake flow of at least 
50 MGD, and thus could be subject to the Phase III regulation under the 
regulatory applicability thresholds as outlined at Proposal and carried 
forward to this NODA. The remaining 9 Food and Kindred Products 
facilities reported design intake flow of less than 50 MGD and thus 
would not be subject to the Phase III regulation, based on the 
regulatory applicability thresholds set forth in the proposed 
regulation. For the purposes of EPA's analyses for the Phase III 
regulation, the estimated extrapolation multiplier of 3.11 would thus 
apply only to those facilities with design intake flow of at least 50 
MGD. Applying this extrapolation multiplier to the 3 Food and Kindred 
Products facilities with at least 50 MGD design intake flow, EPA 
estimates that approximately 9 to 10 facilities, total, in the Food and 
Kindred Products industry could potentially be within the scope of the 
Phase III regulation, based on the lowest of the three regulatory 
applicability thresholds as presented for the proposed regulation. EPA 
seeks comment on usage of this extrapolation concept for estimating the 
industry-level impact of Phase III regulatory compliance for the Food 
and Kindred Products industry.
---------------------------------------------------------------------------

    \17\ See Using Cooling Water Usage Data to Extrapolate Analysis 
Results for the 12 Food & Kindred Products Facilities to the 
Industry Level, DCN 8-2503.
---------------------------------------------------------------------------

    4. Further review of Other Industries facilities outside of the 
Food and Kindred Products industry. As described above, 12 of the 22 
Other Industries facilities are within the Food and Kindred Products. 
The remaining 10 facilities lie in a broad range of industries, with 
five being in manufacturing industries and five in resource and 
agricultural (non-manufacturing) industries. Four of these remaining 
facilities have a DIF greater than 50 MGD, and are in the Fabricated 
Metal Products, Transportation Equipment, and Metal Mining 
industries.\18\
---------------------------------------------------------------------------

    \18\ See Using Cooling Water Usage Data to Extrapolate Analysis 
Results for the 10 Other Industries' Facilities Not In Food & 
Kindred Products to the Industry Level, DCN 8-2558 for further 
information on these facilities.
---------------------------------------------------------------------------

    In the same way as described above for the Food and Kindred 
Products industry facilities, EPA considered extrapolating regulatory 
analysis findings for the non Food and Kindred Products facilities 
based on the fraction of estimated total cooling water usage 
represented by these facilities in their respective industries, and in 
the aggregate of the remaining industries not accounted for by the five 
Primary Manufacturing Industries or the Food and Kindred Products 
industry. This potential basis for extrapolation is limited to only 
those Other Industries facilities that are in Manufacturing sectors, 
because cooling water usage data were collected in the Economic Census 
only for manufacturing industries. Using the same concepts as described 
in the preceding paragraph, EPA calculated that cooling water usage in 
the five manufacturing sector Other Industries facilities represented 
from 0.7 percent to 13.8 percent of the estimated cooling water usage 
in the respective industries of each of these facilities. When the 
calculation is performed on an aggregate basis for all of the 
industries not accounted for by the five Primary Manufacturing 
Industries or the Food and Kindred Products industry, the resulting 
fraction of total cooling water usage accounted for by the five 
manufacturing sector Other Industries facilities is 1.5 percent. These 
relatively low estimated percentage coverages would indicate relatively 
high extrapolation multipliers, ranging from 7.2 to 149.0, for the 
individual industries, and of 67.3 for the aggregate remaining industry 
comparison. Because the estimated fractions of cooling water usage 
covered by the five manufacturing sector Other Industries facilities, 
both by individual industry and in the aggregate, are low (0.7 to 13.8 
percent), the implied statistical error in using this information as a 
basis for extrapolation to the remainder of the industries would be 
very high. Accordingly, EPA has considerably less confidence in using 
the information from the scant number of Other Industries facilities 
outside the Food and Kindred Products industry as a basis for 
extrapolating regulatory findings from the five manufacturing sector 
Other Industries to the industry level than is the case for the Food 
and Kindred Products industry, where the cooling water usage coverage 
is relatively high--32 percent. EPA seeks comment on the usage of this 
extrapolation concept for estimating the industry-level impact of Phase 
III regulatory compliance for Other Industries outside of the Food and 
Kindred Products industry.
    EPA's analysis shows, with only one exception, that the values for 
Other Industries facilities fall within the distributions of values for 
the Primary Industries facilities. As a result, EPA continues to 
propose to include the Other Industries within the scope of the 316(b) 
Phase III regulation. EPA notes this general approach is appropriate 
for determining the national costs and economic impacts of the proposed 
regulations, and these results should not be used for facility-specific 
costing exercises.

B. Alternative Approach to Valuing the Social Cost of Installation 
Downtime

    For the proposal (see Proposed Phase III Economic Analysis Appendix 
2 to Chapter B3: Calculation of Installation Downtime Cost, DCN 7-
0002), EPA calculated the cost of installation downtime for the 
manufacturers facility impact/private cost analysis, as the loss in 
pre-tax income, accounting for lost revenue, reduced variable 
production costs, and cost of replacement electricity, if any. However, 
as described in the proposal, the social cost of downtime is based on a 
different economic concept. Specifically, under the assumption that the 
total quantity of goods and services produced and sold by the affected 
industries would not change as a result of the regulation, the cost to 
society from installation downtime is the increase in cost for 
producing the goods and services that would otherwise have been 
produced by the affected facilities' except for the

[[Page 71064]]

occurrence of installation downtime. That is, other producers are 
assumed to replace the production of goods and services lost due to 
installation downtime, or even the affected facilities may produce 
these goods and services, but in a different time period. Either way, 
the cost to society is the amount, if any, by which the cost to produce 
these replacement goods and services exceeds the cost at which the 
affected facilities would have produced these goods and services if 
they were not to incur installation downtime due to the 316(b) 
regulation. Another possibility is that the quantity of goods and 
services produced would change, in which case social cost comparison 
must also account for lost consumer surplus. EPA believes it is 
reasonable to ignore this effect as long as the overall impacts (and 
any associated price changes) are small relative to the size of the 
affected sectors.
    EPA is not able to estimate precisely what this additional cost is 
likely to be. Conceptually, the cost to society could vary over a broad 
range depending on the structure of, and character of competition in, 
the production of goods and services in the individual markets affected 
by the 316(b) Phase III regulation.
    At the low end of this possible range, if the replacement goods and 
services can be provided by other producers (or by the affected 
facilities but at a different time) at the same variable production 
cost as otherwise would have been incurred by the affected 316(b) Phase 
III facilities, then the cost to society of installation downtime would 
be zero. Because the cost for alternative producers is the same as for 
the producers incurring downtime, society incurs no incremental 
resource cost when other producers provide the replacement goods and 
services. In this case, although the affected 316(b) Phase III 
facilities might incur a financial impact from installation downtime, 
this impact--the loss in pre-tax income described in the preceding 
section--becomes a transfer of income from the producers incurring 
installation downtime losses to the producers who make up the lost 
production.
    At the high end of this possible range, the cost to society would 
be approximately equal to the pre-tax income loss incurred by 
facilities due to installation downtime. That is, the cost to society 
would again be the lost revenue from installation downtime less the 
variable cost of producing the goods and services not produced due to 
the installation downtime. In this case, the variable production cost 
for other producers to replace the lost goods and services is assumed 
to be essentially the same as the price received for the sale of the 
goods and services not produced by the facilities incurring the 
installation downtime. This assumption is consistent with a competitive 
market model of increasing marginal production cost, such that the 
variable production cost of the marginal supplier of goods and services 
produced and sold in any period is approximately equal to the price 
received for those goods and services in the market.
    EPA believes that this latter high-social-cost-valuation approach 
is reasonable for the analysis of installation downtime in the electric 
power industry. For electricity, this assumption is consistent with the 
electricity market concept that the variable production cost of the 
last generating unit to be dispatched is approximately the same as the 
price received for the last unit of production. However, for 
manufacturers, EPA believes that this latter approach may overstate the 
cost to society of installation downtime. The goods and services 
produced by facilities in the manufacturers segment are not necessarily 
produced and sold in as orderly markets as the markets for electricity. 
In addition, unlike electricity, the goods and services produced by 
Phase III manufacturers may be able to be produced at a different time 
than the time at which the goods and services would otherwise have been 
produced by the affected facilities. As a result of these differences 
in market and production characteristics, the cost of producing the 
replacement goods and services may be lower than the price at which the 
goods and services are sold, and as a result, the cost to society of 
downtime would be correspondingly lower. In the lower bound case, as 
outlined above, the replacement goods and services might be produced at 
the same cost as they would otherwise have been produced by the 
affected 316(b) facilities and, in this case, society would incur no 
cost from downtime.
    The likely reality is that the cost to society from installation 
downtime lies somewhere between these cases. At the time of the 
proposal, lacking specific knowledge of the overall production cost 
structure of the affected industries and for the numerous goods and 
services provided by the affected industries, to be conservative in its 
analysis, EPA adopted the higher end assumption for its analysis of the 
social cost of downtime for the manufacturers segment, but explained 
that the resulting value likely overstates social cost. For example, 12 
percent of Phase III facilities (manufacturers with a loss of goods 
produced) incurred average downtime costs of $10,650 per MGD of design 
intake flow (see Technical Development Document for the Proposed 316(b) 
Phase III Rule, page 5-41; DCN 7-0004). In comparison, 18 percent of 
Phase II facilities (i.e. electric generators) incurred average 
downtime costs of $882 per MGD of design intake flow. Actual downtime 
costs (in dollars) vary for each individual facility; see the proposed 
Economic Analysis for more information.
    For this NODA, EPA has calculated the social cost of installation 
downtime both according to the conservative, higher end assumption (as 
presented in the proposal) and according to the lower bound case, in 
which the social cost of downtime is zero. As stated above, EPA is not 
able to know with certainty where the social cost of downtime will 
actually fall along this scale but believes these two cases provide a 
reasonable upper and lower bound of the social cost of downtime. EPA 
seeks comment on which of these approaches to valuing the social cost 
of installation downtime best reflects the national social cost of 
installation downtime for the proposed rule.

C. Estimated Social Cost of Compliance Based on Revised Engineering 
Cost Analysis

    EPA calculated new social cost estimates for the direct cost of 
compliance using costs based on the three different intake flow 
values--the corrected DIF, the AIF, and the MRIF--and reflecting the 
other revisions to the engineering cost analysis as described in 
Section III, above. For this analysis, EPA used the same methodology as 
described in the proposal, but brought all costs forward to mid-2004$ 
using the Implicit Price Deflator for Gross Domestic Product or another 
appropriate index to adjust costs to the year of interest. For the 
analysis of social costs, EPA used two discount rates, 3% and 7%, to 
discount all costs to the beginning of 2007, the date at which the rule 
is assumed to become effective. EPA assumed that all regulated 
facilities would achieve compliance between 2010 and 2014, and 
estimated the time profile of compliance and related costs over 30 
years from the year of compliance for each complying facility. The last 
year for which costs were tallied is 2043. The basis for these 
projections can be found in Chapter B1 of the Economic Analysis for the 
Proposed Section 316(b) Rule for Phase III Facilities (DCN 7-0002). For 
this NODA, EPA did not estimate costs incurred by governments for

[[Page 71065]]

administering the regulation as these costs are not expected to differ 
materially from those presented at proposal.
    Below, EPA presents these revised social cost estimates of the 
direct cost of compliance to facilities, based on the three threshold 
options in the proposed Phase III rule: (1) Design intake flow of at 
least 50 MGD, any source waterbody type (``50 MGD ALL''), (2) design 
intake flow of at least 200 MGD any source waterbody type (``200 MGD 
ALL''), and (3) design intake flow of at least 100 MGD, from an ocean, 
estuary, tidal river, or Great Lake (``100 MGD Certain Waterbodies''). 
The first set of exhibits and discussion bring forward to mid-year 
2004$ the costs based on DIF as known at proposal and compare these 
values to the cost estimates based on the corrected DIF, which reflect 
the corrections and adjustment made to the DIF since proposal, as 
described in Section III. C, above. These cost estimates reflect the 
upper bound valuation of downtime, as presented at proposal. In the 
second section, EPA presents the alternative cost estimates for the 
corrected DIF values using the lower bound valuation of downtime, as 
described in Section IV.B, above. The third section presents costs 
using the alternative intake flow concepts as the basis for determining 
regulatory applicability--Maximum Reported Intake Flow (MRIF) and 
Average Intake Flow (AIF). Finally, EPA presents a summary comparison 
of the cost estimates under the original and corrected DIF and 
alternative intake flow concepts, and for the upper and alternative, 
lower bound estimate of the social cost of downtime.

Adjusting Proposal Cost Estimates to 2004 Dollars and Applying DIF 
Corrections

    Exhibits IV-3 and IV-4 summarize the changes in the cost estimates 
from proposal, based first, on bringing the cost values forward from 
mid-year 2003 to mid-year 2004, and second, on the corrections to DIF, 
as described at Section III. C, above. As shown in Exhibit IV-3, the 
proposal cost estimates were brought forward to mid-year 2004 using the 
Implicit Price Deflator for Gross Domestic Product. This adjustment 
resulted in a uniform increase of 2.6% (rounded) to each component of 
social cost and to total social cost.

   Exhibit IV-3.--Annualized Total Social Costs of Compliance for All Options as Presented at Proposal Brought
                                                Forward to 2004$
                                                  [In millions]
----------------------------------------------------------------------------------------------------------------
                                                             In 2003$                        In 2004$
                                                 ---------------------------------------------------------------
                 Cost component                     3% discount     7% discount     3% discount     7% discount
                                                       rate            rate            rate            rate
----------------------------------------------------------------------------------------------------------------
                                                50 MGD All Option
----------------------------------------------------------------------------------------------------------------
Pilot Study.....................................            $0.3            $0.4            $0.3            $0.4
Initial Permitting..............................             2.7             3.7             2.7             3.8
Downtime........................................            14.3            18.6            14.6            19.1
Capital Cost....................................            14.1            13.9            14.5            14.2
O&M.............................................             8.0             6.7             8.2             6.9
Repermitting....................................             3.1             2.5             3.2             2.6
Monitoring......................................             4.4             3.7             4.5             3.8
                                                 -----------------
    Total Social Cost...........................            46.8            49.5            48.0            50.8
-------------------------------------------------
                                               200 MGD All Option
----------------------------------------------------------------------------------------------------------------
Pilot Study.....................................             0.1             0.2             0.1             0.2
Initial Permitting..............................             0.5             0.7             0.6             0.8
Downtime........................................             7.4             9.9             7.6            10.1
Capital Cost....................................             7.9             7.7             8.1             7.9
O&M.............................................             4.9             4.1             5.1             4.2
Repermitting....................................             0.6             0.5             0.6             0.5
Monitoring......................................             1.1             0.9             1.1             0.9
                                                 -----------------
    Total Social Cost...........................            22.6            24.0            23.2            24.6
-------------------------------------------------
                                       100 MGD Certain Waterbodies Option
----------------------------------------------------------------------------------------------------------------
Pilot Study.....................................             0.2             0.3             0.2             0.3
Initial Permitting..............................             0.8             1.1             0.9             1.2
Downtime........................................             4.3             5.6             4.4             5.8
Capital Cost....................................             7.1             6.9             7.3             7.0
O&M.............................................             2.9             2.4             3.0             2.5
Repermitting....................................             0.9             0.8             0.9             0.8
Monitoring......................................             1.3             1.1             1.3             1.1
                                                 -----------------
    Total Social Cost...........................            17.5            18.1            17.9           18.6
----------------------------------------------------------------------------------------------------------------
Note: Prices adjusted to 2004$ using the Implicit Price Deflator for Gross Domestic Product. See DCN 8-2521.

    As described above, EPA corrected the DIF for certain facilities 
and revised the estimates of compliance costs based on these corrected 
DIF values. Exhibit IV-4, below, compares the total annualized social 
costs of the three proposed options under the DIF as known at proposal 
to the new costs based on the corrected DIF. For the 50

[[Page 71066]]

MGD All Option, total social costs decline from $48.0 million to $36.7 
million under the 3% rate, and from $50.8 to $37.5 million at the 7% 
rate. The 200 MGD All Option's total social costs decrease from $23.2 
million to $18.1 million at the 3% rate, and from $24.6 million to 
$18.8 million at the 7% rate. Total social costs under the 100 MGD 
Certain Waterbodies Option fall from $17.9 million to $13.7 million at 
the 3% rate, and from $18.6 to $13.3 million at the 7% rate. EPA notes 
that due to the smaller number of facilities potentially regulated 
under the 200 MGD All and the 100 MGD Certain Waterbodies options, 
changes in costs for any one model facility are more likely to result 
in large changes in the total national costs.

   Exhibit IV-4.--Comparison of Annualized Social Costs of Compliance Using DIF as Known at Proposal and Using
                                                  Corrected DIF
                                            [In millions, mid-2004$]
----------------------------------------------------------------------------------------------------------------
                                                             In 2003$                        In 2004$
                                                 ---------------------------------------------------------------
                 Cost component                     3% discount     7% discount     3% discount     7% discount
                                                       rate            rate            rate            rate
----------------------------------------------------------------------------------------------------------------
                                                50 MGD All Option
----------------------------------------------------------------------------------------------------------------
Pilot Study.....................................            $0.3            $0.4            $0.3            $0.4
Initial Permitting..............................             2.7             3.8             3.2             4.5
Downtime........................................            14.6            19.1             5.9             7.9
Capital Cost....................................            14.5            14.2            13.1            12.9
O&M.............................................             8.2             6.9             5.1             4.3
Repermitting....................................             3.2             2.6             3.8             3.1
Monitoring......................................             4.5             3.8             5.3             4.5
                                                 -----------------
    Total Social Cost...........................            48.0            50.8            36.7            37.5
-------------------------------------------------
                                               200 MGD All Option
----------------------------------------------------------------------------------------------------------------
Pilot Study.....................................             0.1             0.2             0.1             0.2
Initial Permitting..............................             0.6             0.8             0.7             0.9
Downtime........................................             7.6            10.1             4.3             5.9
Capital Cost....................................             8.1             7.9             8.1             7.9
O&M.............................................             5.1             4.2             2.8             2.3
Repermitting....................................             0.6             0.5             0.8             0.6
Monitoring......................................             1.1             0.9             1.4             1.1
                                                 -----------------
    Total Social Cost...........................            23.2            24.6            18.1            18.8
-------------------------------------------------
                                       100 MGD Certain Waterbodies Option
----------------------------------------------------------------------------------------------------------------
Pilot Study.....................................             0.2             0.3             0.2             0.2
Initial Permitting..............................             0.9             1.2             1.0             1.3
Downtime........................................             4.4             5.8             0.0             0.0
Capital Cost....................................             7.3             7.0             8.3             8.1
O&M.............................................             3.0             2.5             1.7             1.4
Repermitting....................................             0.9             0.8             1.1             0.9
Monitoring......................................             1.3             1.1             1.5             1.3
                                                 -----------------
    Total Social Cost...........................            17.9            18.6            13.7            13.3
----------------------------------------------------------------------------------------------------------------

Compliance Costs Based on Upper and Lower Bound Valuation of 
Installation Downtime and Using Corrected DIF Values
    As described at Section IV.B, EPA also developed social cost 
estimates based on an alternative concept of downtime valuation. 
Exhibit IV-5 compares the estimates of social cost using the corrected 
DIF values under the original, upper bound downtime valuation concept 
and the alternative, lower bound valuation concept. For this 
comparison, all components of cost except downtime cost are unchanged 
between the two cases, and, as described, for the alternative, lower 
bound valuation concept, the estimated downtime cost is simply set to 
zero. As shown in Exhibit IV-5, the total social cost values decline by 
16 percent (3% discount rate) and 21 percent (7% discount rate) under 
the 50 MGD All Option and by 24 percent (3% discount rate) and 31 
percent (7% discount rate) under the 200 MGD All Option. Because no 
facilities are expected to incur downtime costs under the 100 MGD 
Certain Waterbodies Option, the estimated social costs are the same 
under both the upper and lower bound downtime valuation cases.

[[Page 71067]]

  Exhibit IV-5.--Annualized Social Cost of Compliance Using Corrected DIF at Upper and Lower Bound Estimates of
                                                    Downtime
                                            [In millions, mid-2004$]
----------------------------------------------------------------------------------------------------------------
                                                    Upper valuation of downtime     Lower valuation of downtime
                                                 ---------------------------------------------------------------
                Regulatory Option                   3% discount     7% discount     3% discount     7% discount
                                                       rate            rate            rate            rate
----------------------------------------------------------------------------------------------------------------
50 MGD All......................................           $36.7           $37.5           $30.7           $29.6
200 MGD All.....................................            18.1            18.8            13.7            13.0
100 MGD Certain Waterbodies.....................            13.7            13.3            13.7            13.3
----------------------------------------------------------------------------------------------------------------

Comparison of Alternative Intake Flow Concepts as Basis for Determining 
Regulatory Applicability
    EPA also estimated social costs using the two alternative intake 
flow concepts for determining regulatory applicability--Maximum 
Reported Intake Flow (MRIF) and Average Intake Flow (AIF). Exhibit IV-6 
presents the social costs under these alternative flow concepts for 
each option, using the upper bound downtime valuation concept, as 
described at proposal. Costs are lower under both of the alternative 
intake flow approaches than under the DIF approach. Costs decrease by a 
greater amount (relative to the corrected DIF values) under the AIF 
approach than under the MRIF approach. As discussed at proposal, these 
costs assume all facilities would comply with the regulations by 
installing the single best-performing technology module, which does not 
necessarily reflect the most cost-effective compliance alternative (69 
FR 68499).
    Overall, the costs for the 50 MGD All Option decrease, at the 3 
percent rate, from $36.7 million under the corrected DIF, to $33.5 
million (MRIF basis) and to $32.0 million (AIF basis). At the 7 percent 
rate, total costs decline from $37.5 million under the corrected DIF to 
$34.2 million (MRIF), and to $32.7 million (AIF). Under the 200 MGD All 
Option, costs decline, at the 3 percent rate, from $18.1 million under 
the corrected DIF to $16.5 million (MRIF), and to $15.4 million (AIF). 
At the 7 percent rate, costs decline from $18.8 million under the 
corrected DIF to $17.1 million (MRIF) and to $16.1 million (AIF). Under 
the 100 MGD Certain Waterbodies Option, at the 3 percent discount rate, 
total social costs decline from $13.7 million under the corrected DIF 
to $11.7 million (MRIF) and to $10.6 million (AIF). At the 7 percent 
discount rate, costs decline from $13.3 million under the corrected DIF 
to $11.3 million (MRIF), and to $10.2 million (AIF).

     Exhibit IV-6.--Annualized Social Cost of Compliance Under MRIF and AIF Bases for Determining Regulatory
                                  Applicability, Upper Bound Downtime Valuation
                                            [In millions, mid-2004$]
----------------------------------------------------------------------------------------------------------------
                                                               MRIF                             AIF
                                                 ---------------------------------------------------------------
                 Cost Component                     3% discount     7% discount     3% discount     7% discount
                                                       rate            rate            rate            rate
----------------------------------------------------------------------------------------------------------------
                                                50 MGD All Option
----------------------------------------------------------------------------------------------------------------
Pilot Study.....................................            $0.2            $0.2            $0.2            $0.2
Initial Permitting..............................             3.2             4.5             3.2             4.5
Downtime........................................             5.4             7.2             5.4             7.2
Capital Cost....................................            11.0            10.8             9.6             9.4
O&M.............................................             4.7             3.9             4.5             3.8
Repermitting....................................             3.8             3.1             3.8             3.1
Monitoring......................................             5.3             4.5             5.3             4.5
                                                 -----------------
    Total Social Cost...........................            33.5            34.2            32.0            32.7
-------------------------------------------------
                                               200 MGD All Option
----------------------------------------------------------------------------------------------------------------
Pilot Study.....................................             0.1             0.1             0.1             0.1
Initial Permitting..............................             0.7             0.9             0.7             0.9
Downtime........................................             3.8             5.1             3.8             5.1
Capital Cost....................................             7.3             7.1             6.4             6.2
O&M.............................................             2.5             2.1             2.3             2.0
Repermitting....................................             0.8             0.6             0.8             0.6
Monitoring......................................             1.4             1.1             1.4             1.1
                                                 -----------------
    Total Social Cost...........................            16.5            17.1            15.4             6.1
-------------------------------------------------
                                       100 Certain MGD Waterbodies Option
----------------------------------------------------------------------------------------------------------------
Pilot Study.....................................             0.1             0.1             0.1             0.1
Initial Permitting..............................             1.0             1.3             1.0             1.3
Downtime........................................             0.0             0.0             0.0             0.0
Capital Cost....................................             6.8             6.6             5.7             5.5
O&M.............................................             1.4             1.2             1.3             1.1

[[Page 71068]]

Repermitting....................................             1.1             0.9             1.1             0.9
Monitoring......................................             1.5             1.3             1.5             1.3
                                                 -----------------
    Total Social Cost...........................            11.7            11.3            10.6            10.2
----------------------------------------------------------------------------------------------------------------

Summary of Social Costs Over Regulatory Options, Alternative Intake 
Flow Concepts, and Alternative Installation Downtime Valuations
    Exhibit IV-7, below, summarizes social costs according to the 
various regulatory and analytic configurations as outlined in the 
preceding discussion.

      Exhibit IV-7.--Annualized Social Costs Over Regulatory Options, Alternative Intake Flow Concepts, and
                                  Alternative Installation Downtime Valuations
                                            [In millions, mid-2004$]
----------------------------------------------------------------------------------------------------------------
                                   Discount rate
        Regulatory option            (percent)     Proposed rule   Corrected DIF       MRIF             AIF
----------------------------------------------------------------------------------------------------------------
Upper Bound Downtime Valuation
 Concept, as Presented at
 Proposal:
    50 MGD All Option...........               3            48.0            36.7            33.5            32.0
                                               7            50.8            37.5            34.2            32.0
    200 MGD All Option..........               3            23.2            18.1            16.5            15.4
                                               7            24.6            18.8            17.1            16.1
    100 MGD Certain Waterbodies                3            17.9            13.7            11.7            10.6
     Option.....................               7            18.6            13.3            11.3            10.2
Alternative, Lower Bound
 Downtime Valuation Concept:
    50 MGD All Option...........               3            33.4            30.7            28.1            26.6
                                               7            31.7            29.6            28.1            25.5
    200 MGD All Option..........               3            15.7            13.7            12.7            11.6
                                               7            14.5            13.0            11.9            10.9
    100 MGD Certain Waterbodies                3            13.5            13.7            11.7            10.6
     Option.....................               7            12.8            13.3            11.3            10.2
----------------------------------------------------------------------------------------------------------------

D. Additional Regulatory Costs to 316(b) Facilities

    EPA's after-tax cash flow (ATCF) adjustment analysis brings the 
estimates of cash flow forward from the time of the 316(b) facility 
survey (years 1996-1998) to the time of the regulatory analysis (2003). 
The ATCF analysis does account implicitly for additional regulatory 
costs incurred through 2003. However, the ATCF adjustment analysis does 
not capture the impact of new regulations that came into effect during 
this period and for which costs had not yet been incurred, or fully 
incurred, by 2003. The EPA is aware of other environmental regulations 
that were recently or soon to be promulgated, potentially imposing 
additional costs beyond those reflected in the survey financial 
statements. Prior to determining the final compliance costs for the 
316(b) Phase III regulations, EPA will review EPA's Unified Agenda for 
EPA regulatory actions that may affect Phase III regulated facilities 
during the time horizon of the analysis. EPA does not have cost 
information to provide at this time; however, EPA intends to review 
regulatory actions not captured in the proposed rule ATCF adjustment 
analysis, and then consider whether estimation of model facility costs 
for these regulations might be warranted for the Phase III final 
regulation analysis. EPA intends to include these evaluations as 
supplemental economic analyses in the final record.

V. Benefits

    In today's NODA, EPA is making several minor corrections to its 
analysis of national benefits. The meta-analysis used for the proposal 
to estimate recreational fishing benefits was revised in response to 
peer review comments.\19\ These corrections help to better characterize 
the summary level data generated by the analysis and are discussed 
below. In addition, a revised commercial fishing benefits approach that 
uses both revenue and cost data that are region and species specific, 
and also accounts for the effect of region and species specific fishery 
management regimes on the potential benefits is discussed. EPA also 
examined a modeling approach that considers the effects of population-
level dynamics in estimating the impact of impingement mortality and 
entrainment.
---------------------------------------------------------------------------

    \19\ A.L. Allen (EPA). Memorandum to EPA Docket OW-2004-0002. 
Materials for Peer Review of the Population Projection Matrix Model. 
DCN 8-5200.
---------------------------------------------------------------------------

A. Recreational Benefits

    In this NODA, EPA is documenting a few minor changes to the meta-
analysis

[[Page 71069]]

methodology used to estimate recreational fishing benefits.\20\ Meta 
regressions are designed to statistically summarize the relationship 
between benefit measures and a set of characteristics compiled from 
multiple primary study sources. The changes, which were made in 
response to peer reviewers' comments, all relate to the way the 
explanatory variables are defined in the meta-analysis equation that 
allows EPA to estimate the recreational benefits.
---------------------------------------------------------------------------

    \20\ See Recreational Fishing Analysis for the 316(b) Regulation 
for Phase III Facilities (DCN 8-4601).
---------------------------------------------------------------------------

    The first change made to the specification of the meta-model was to 
combine the trout--west, trout--east, and trout--other variables into a 
new variable, trout--nonGL. This variable represents all species of 
trout caught outside of the Great Lakes region. This change was made to 
address concerns about the limited number of observations within each 
of the three initial variables, particularly trout--other. The 
estimated coefficients on these fish type variables may reflect more 
than influences of trout--other on the calculation of willingness-to-
pay dollar values, and may inadvertently capture other study-specific 
influences not fully modeled, such as study geography. The new 
variable, trout--nonGL, now includes 49 observations. This increased 
number of observations is expected to decrease overall sensitivity of 
the model to any single data point.
    EPA also changed the meta-model by revising the specification of 
the trips and age variables using categorical (dummy) variables. Age 
and trips are now represented by two dummy variables each: age42--down, 
age43--up, trips19--down, and trips20--up. For example, age42--down is 
a binary variable indicating that the mean age of sample respondents in 
a particular study was less than 43 years. This means that the variable 
is one if the mean age of the sample respondents is less then 43 and 
zero if the mean sample age was greater than or equal to 43, or was not 
reported. The variable p age43--up is a binary variable indicating that 
the mean age of sample respondents was 43 or greater. This means that 
the variable is one if the mean age of the sample respondents is 43 or 
greater and zero if the mean sample age was less than 43, or was not 
reported. The default case captures studies in which mean age was not 
reported. Similar logic applies to the trips variables. Because age and 
trips were not reported by all studies, EPA believes that this is a 
more appropriate and transparent means of representing these variables. 
These new dummy variables are interpreted as the additional impact on 
willingness-to-pay values associated with studies that reported age (or 
trips) that fall in the four defined categories, compared to the 
default of when age (or trips) data are not reported. The values at 
which the two sets of dummy variables were divided (43 and 20, for age 
and trips, respectively) were chosen because they occur approximately 
halfway through the range of age and trips values observed in the meta-
data.
    The final change that EPA made to the meta-model was to drop the 
gender variable. EPA chose to eliminate this variable because, after 
the model modifications discussed above, all categorical (dummy) 
variable specifications of the gender variable were not statistically 
significantly different. Other model results were not affected by this 
omission.
    The following Exhibit IV-8 presents the marginal recreational 
values per fish used in the proposed rule analysis and the values 
calculated based on the revised meta-model. Most of the revised 
marginal per fish values are 10% to 50% lower than the values used in 
the proposed rule analysis. The greatest decrease in per fish values 
occurred in the California region. The revised values for the 
California region are, however, more consistent with the values 
estimated for other regions. The revised marginal values for freshwater 
bass and panfish in the Great Lakes region are 3% (panfish) to 19% 
(bass) higher.

                                       Exhibit IV-8.--Marginal Recreational Value Per Fish, by Region and Species
                                                                       [Mid-2004$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                       Marginal Recreational Value per Fish, by Region and Species (June 2004$) a
---------------------------------------------------------------------------------------------------------------------------------------------------------
                 Species                    California    North Atlantic   Mid-Atlantic   South Atlantic  Gulf of Mexico    Great Lakes       Inland
--------------------------------------------------------------------------------------------------------------------------------------------------------
Marginal Recreational Value per Fish
 Used in the Proposed Rule Analysis:
    Small game b........................          $12.98           $7.89           $7.09           $5.83           $5.49  ..............           $7.62
    Flatfish............................           16.12            8.32            7.14            6.03  ..............  ..............  ..............
    Other saltwater c...................            4.67            4.34            3.85            3.19            2.97  ..............  ..............
    Salmon..............................  ..............  ..............  ..............  ..............  ..............          $11.56  ..............
    Trout...............................  ..............  ..............  ..............  ..............  ..............            8.25            2.88
    Walleye/pike........................  ..............  ..............  ..............  ..............  ..............            4.73            5.32
    Bass................................  ..............  ..............  ..............  ..............  ..............            6.09            7.19
    Panfish.............................  ..............  ..............  ..............  ..............  ..............            1.09            1.00
Revised Marginal Recreational Value per
 Fish:
    Small game b........................            6.14            5.03            4.99            4.84            4.76  ..............            4.53
    Flatfish............................            8.25            5.04            4.75            4.75  ..............  ..............  ..............
    Other saltwater c...................            2.50            2.52            2.47            2.41            2.34  ..............  ..............
    Salmon..............................  ..............  ..............  ..............  ..............  ..............          $11.23  ..............
    Trout...............................  ..............  ..............  ..............  ..............  ..............            7.98            2.40
    Walleye/pike........................  ..............  ..............  ..............  ..............  ..............            3.48            3.47
    Bass................................  ..............  ..............  ..............  ..............  ..............            7.24            7.62

[[Page 71070]]

    Panfish.............................  ..............  ..............  ..............  ..............  ..............            1.13           0.90
--------------------------------------------------------------------------------------------------------------------------------------------------------
a Marginal values per fish are presented only for species in regions in which they are affected by one of the regulatory options evaluated for the
  proposed rule.
b Other saltwater species include bottom fish and other miscellaneous species
c Anadromous species such as striped bass and American shad can be found in freshwater coastal rivers as well as in saltwater.

    EPA estimates the recreational welfare gain from the proposed 
regulation by multiplying the marginal value per fish by the additional 
number of fish caught by recreational anglers that would have been 
impinged or entrained in the absence of the regulation. Whether the 
total value of recreational fishing benefits of the final 316b rule 
will be revised downward or upward will depend on the estimated 
reduction in impingement and entrainment attributed to the 316(b) 
regulation for Phase III facilities and species affected by impingement 
and entrainment.

B. Commercial Fishing Benefits

    EPA is considering a revision to its methodology for estimating the 
commercial fishing-related benefits to society from the 316(b) Phase 
III regulation. Whereas the previous analysis for the Phase II 
regulation and the Phase III proposed regulation relied on region- and 
species-specific revenue data, those analyses did not use region-
specific harvesting cost data and also did not account for the effect 
of region- and species-specific fishery management regimes on expected 
societal benefits. The revised approach uses both revenue and cost data 
that are region- and species-specific, and also accounts for the effect 
of region- and species-specific fishery management regimes on the 
potential benefits. In addition, the data underlying the revised 
analysis are also considerably more recent than the data used in the 
previous analyses.
    The analysis develops estimates of societal net benefits derived 
from increased commercial fishing harvest resulting from reduced 
impingement and entrainment of marine aquatic species. For this 
analysis, the Agency retained the proposed assumption that the 316(b) 
regulations will not affect the commercial catch landing price, but 
will affect the quantity of fish harvested at that price. As a result, 
the analysis continues to focus on the increase in producer surplus as 
the measure of societal benefit in the commercial fishing sector. Net 
benefits are assessed as the product of an estimated net benefits ratio 
for each species and region-specific fishery, multiplied by the gross 
revenue from increased commercial fishing harvest. The analysis 
utilizes the most recent available variable cost, landings and ex-
vessel price data collected by the regional offices of NOAA's National 
Marine Fisheries Service (NOAA Fisheries).\21\ The data and the 
methodology used in this analysis are the same as those used by NOAA 
Fisheries to assess the effect of new or amended fishery regulations on 
the U.S. commercial fishing industry and the U.S. economy. EPA solicits 
comment on the use of these data in the revised commercial fishing 
benefits analysis.
---------------------------------------------------------------------------

    \21\ See DCNs 8-4800 to 8-4906.
---------------------------------------------------------------------------

    Today's NODA provides results of this revised approach for the 
North and Mid Atlantic regions. The decrease in fishermen's costs 
produces an increase in social welfare with monetized regional values 
that range from zero to $9,418 ($2002, undiscounted) depending on the 
species of interest. The complete analysis is described in more detail 
in the memo, ``Revised Assessment of Commercial Fishery Benefits for 
316(b) Regulations; The North and Mid Atlantic Regions'' (DCN 8-4918). 
EPA solicits comment on the use of this revised approach for all 
regions for which NOAA Fisheries data are available.

C. Impingement and Entrainment

    EPA is using an age-structured matrix population model to examine 
the potential population-level consequences of impingement mortality 
and entrainment of individual organisms. EPA refers to the model as the 
Population Projection Matrix (PPM) model. A matrix population model 
uses stage-specific rates of survival and reproduction, combined with 
the number of individuals in each stage, to estimate changes in 
population size over time.\22\ The model considers the effects of 
certain population-level dynamics (i.e., density-dependent survival and 
reproduction) that are not directly considered in EPA's other modeling 
efforts.
---------------------------------------------------------------------------

    \22\ See Caswell, H. 1989. Matrix Population Models: 
Construction, Analysis, and Interpretation. Sinauer Associates, 
Inc., Sunderland, MA.
---------------------------------------------------------------------------

    For those species and populations for which sufficient data are 
available, EPA is first using the PPM model to represent a species' 
population under current conditions (i.e., without implementation of 
the regulatory options proposed in this rulemaking effort). The model 
uses the same species and stage-specific rates of survival used for 
EPA's modeling efforts presented as part of the proposed rule (see DCNs 
2-0016 to 2-0024), as well as reproductive rates estimated by a 
calibration procedure based on the intrinsic growth rate of the 
population size.\23\ By reference to historical harvest rates for the 
population and facility-provided impingement and entrainment loss 
records, the model partitions total mortality for the population into 
three sources of mortality: Natural mortality, fishing mortality, and 
mortality due to impingement and entrainment. Density-dependent 
survival in a single life stage is modeled as a linear function of 
population abundance, with the carrying capacity of the population set 
so that the equilibrium harvest level predicted by the model under 
baseline conditions matches the average historic harvest level for the 
population. The model does not strictly specify the life stage in which 
density dependent survival occurs, but instead allows users to 
designate one life stage as being subject to density dependent 
survival. EPA will consider available information on density dependent 
survival dynamics when making this designation so as to identify 
biologically realistic model scenarios.\24\
---------------------------------------------------------------------------

    \23\ Myers, R.A., K.G. Bowen, and N.J. Barrowman. 1999. Maximum 
reproduction rate of fish at low population sizes. Canadian Journal 
of Fisheries and Aquatic Sciences 56:2004-2419 (DCN OW-2002-0004-
1793).
    \24\ See Section 4 in Newbold, S. and R. Iovanna. 2005. 
Population-level Impacts on Fish of Cooling Water Intake 
Withdrawals. Report prepared for the 316(b) Scientific and Economic 
Review panel. National Center for Environmental Economics, U.S. EPA, 
Washington, DC. DCN 8-5201.

---------------------------------------------------------------------------

[[Page 71071]]

    EPA is then using the PPM model to evaluate the potential impacts 
of regulatory options described in the proposed rule. To do this, EPA 
adjusts the life stage-specific rates of impingement and entrainment 
mortality to reflect the estimated effectiveness of a given regulatory 
option. EPA then compares the model's estimates with and without 
implementation of a given regulatory option to estimate the option's 
impact on population abundance.
    Given the limited number of species populations for which 
sufficient data is available to implement the PPM model, EPA foresees 
using the model as a supplement to, rather than as a replacement for, 
the modeling efforts described in the proposal. Some preliminary 
results from use of the PPM model are described in Section 4 of DCN 8-
5201. EPA has also conducted a peer review of the model.\25\ EPA 
solicits comment on the use of the PPM model for the final rule. EPA 
also solicits submission of data that may be used to implement the 
model.
---------------------------------------------------------------------------

    \25\ A.L. Allen (EPA). Memorandum to EPA Docket OW-2004-0002. 
Materials for Peer Review of the Population Projection Matrix Model. 
DCN 8-5200.

    Dated: November 18, 2005.
Benjamin H. Grumbles,
Assistant Administrator for Water.
[FR Doc. 05-23276 Filed 11-23-05; 8:45 am]

BILLING CODE 6560-50-U