[Federal Register Volume 61, Number 136 (Monday, July 15, 1996)]
[Proposed Rules]
[Pages 36835-36858]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17802]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 63 and 430

[FRL-5535-5]
RIN 2060-AD03 and 2040-AB53


Effluent Limitations Guidelines, Pretreatment Standards, and New 
Source Performance Standards: Pulp, Paper, and Paperboard Category; 
National Emission Standards for Hazardous Air Pollutants for Source 
Category: Pulp and Paper Production; Availability

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of availability.

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SUMMARY: On December 17, 1993, EPA proposed standards to reduce the 
discharge of water pollutants and emissions of hazardous air pollutants 
from the pulp, paper, and paperboard industry (58 FR 66078). This 
document describes the Agency's goals for environmental improvement in 
this industry, announces a framework for the final wastewater 
standards, and presents the preliminary results of detailed analyses 
for a portion of this industry.

DATES: Comments on this notice are solicited and will be accepted until 
August 14, 1996. Comments are to be submitted in triplicate, and also 
in electronic format (diskettes) if possible.

ADDRESSES: Comments are to be submitted to Mr. David Hoadley at the 
following address: Engineering and Analysis Division (4303), EPA, 401 M 
Street, SW., Washington, DC 20460.
    The framework and preliminary results of detailed analyses being 
announced today are based on data and information in the EPA Water 
Docket at EPA Headquarters at Waterside Mall, room M2616, 401 M Street, 
SW, Washington, DC 20460, telephone (202) 260-3027. The Docket staff 
requests that interested parties call for an appointment before 
visiting the Docket. A reasonable fee may be charged for copying.

FOR FURTHER INFORMATION CONTACT: For questions regarding wastewater 
standards, contact Mr. Donald Anderson at the following address: 
Engineering and Analysis Division (4303), EPA, 401 M Street, SW., 
Washington, DC 20460, telephone number (202) 260-7189, or Mr. Ronald 
Jordan also at this address, telephone number (202) 260-7115. For 
questions regarding air emissions standards, contact Ms. Penny 
Lassiter, Emissions Standards Division (MD-13), U.S. Environmental 
Protection Agency, Research Triangle Park, NC 27711, telephone number 
(919) 541-5396.

Contents of This Notice

I. Summary of Notices for this Regulation
II. EPA's Long-Term Environmental Goals
III. Anticipated Schedule for Issuing Final Wastewater Standards
    A. Schedule for Proposed Bleached Papergrade Kraft and Soda and 
Proposed Papergrade Sulfite Subcategories
    B. Scheduled for Proposed Dissolving Kraft and Dissolving 
Sulfite Subcategories
    C. Schedule for the Remaining Proposed Subcategories
IV. Post-Proposal Data Gathering
V. Regulatory Framework and Preliminary Results
    A. Proposed Bleached Papergrade Kraft and Soda Subcategory
    1. Preliminary Conclusion Regarding Technology Basis for BAT
    2. Incentives for Further Environmental Improvements
    3. Technology Options for BAT
    4. Framework for PSES
    5. Pollutant Parameters
    6. Best Management Practices
    7. Costs for Options A and B
    8. Effluent Reduction Benefits
    9. Revised Effluent Limitations
    a. Changes to Statistical Methodology
    b. Revised Effluent Limitations Being Considered
    10. Conventional Pollutant Limitations (BPT and BCT)
    11. Technology Options for NSPS
    12. Revised Economic Impact Results
    a. Revisions to the Economic Analysis
    b. Economic Impacts of BAT Options A and
    c. Cost-Effectiveness
    B. Proposed Papergrade Sulfite Subcategory
    1. Preliminary Conclusions Regarding Technology Basis for BAT
    2. Technology Options for BAT
    3. Costs
    4. Effluent Reduction Benefits
    5. Revised Effluent Limitations for BAT and PSES
    6. Conventional Pollutant Limitations
    7. Technology Options and Revised Effluent Limitations for NSPS
    8. Economic Impacts
    a. Costs and Impacts
    b. Cost-Effectiveness
VI. Environmental Assessment
VII. Best Management Practices
VIII. Pretreatment Standards
IX. Implementation Issues
    A. Permit Limits for Multiple Subcategory Mills
    B. New Sources
    C. Monitoring
    D. BMPs as NPDES Permit Special Conditions
    E. Relationship Between the Cluster Rules and Project XL
    F. Summary of Changes to Methods for Analysis of Pulp and Paper 
Industry Wastewaters
    1. Method 1624, Volatiles by Purge-and-Trap and Isotope Dilution 
GC/MS
    2. Method 1650, AOX by Adsorption and Coulometric
    3. Method 1653, Chlorophenolics by In-Situ Derivatization and 
Isotope Dilution GC/MS
    4. Method NCASI Technical Bulletin No. 253, Color
    G. Regulatory Flexibility Analysis
X. Incentives for Further Environmental Improvements
    A. Advanced Technology Tiers
    1. Definition of Incentives-Related BAT Limitations or NSPS by 
Tier
    a. Tier I BAT Limitations
    b. Tier II BAT Limitations and NSPS
    c. Tier III BAT Limitations and NSPS
    2. Basis for Incentives-Related BAT Limitations and NSPS
    3. Legal Authority to Establish Incentives-Related BAT 
Limitations and NSPS
    B. Incentives Available Prior to Achievement of Incentives-
Related BAT
    1. Extended Compliance Schedules

[[Page 36836]]

    C. Incentives Available After Achievement of Advanced Technology 
BAT Limitations and NSPS
    1. Greater certainty regarding permit limits and requirements
    2. Reduced effluent monitoring
    3.Reduced penalties
    4. Reduced inspections
    5. Public recognition programs
    6. Fast-track permit modification
    D. Solicitations of Comments on Incentives Program
    E. Alternative Incentives Programs and Provisions Suggested by 
Stakeholders

I. Summary of Notices for This Regulation

    Today's notice announces the Agency's current thinking, based on 
preliminary detailed evaluation of the supplemented record and 
stakeholder discussions, regarding the technology bases to be 
considered for setting final effluent limitations and standards for a 
portion (i.e., certain subcategories) of this industry. These 
subcategories are the proposed bleached papergrade kraft and soda and 
papergrade sulfite subcategories. Today's notice continues the public 
review and participation process that began with the proposed 
rulemaking and continued with additional notices.
    On December 17, 1993 (58 FR 66078), EPA proposed integrated air and 
water rules that included limitations and standards to reduce the 
discharge of toxic, conventional, and nonconventional pollutants in 
wastewaters and emissions of hazardous air pollutants from the pulp, 
paper, and paperboard industry. On March 17, 1994 (59 FR 12567), EPA 
published a correction notice to the proposed rules and extended the 
comment period to April 18, 1994.
    In the preamble to the proposed rules, EPA solicited data on 
various issues and questions related to the proposed effluent 
limitations guidelines and standards and air emissions standards. The 
Agency received and added new material to the Air and Water Dockets. In 
a notice of data availability published on February 22, 1995 (60 FR 
9813), EPA announced the availability of new data related to the 
proposed air emissions standards. Those new data are located in Air 
Docket A-92-40. In a second notice of data availability published on 
July 5, 1995 (60 FR 34938), EPA announced the availability of new 
information and data related to the proposed effluent limitations 
guidelines and standards. Those new data are located starting at 
Section 18.0 of the Post-Proposal Rulemaking Record, which is a 
continuation of the proposal record. The Post-Proposal Rulemaking 
Record is located in the Water Docket, which is updated periodically to 
include other new information and analyses. EPA did not solicit comment 
on the new air and water data in either notice. EPA solicits comment on 
the information and data announced in those prior notices, on the 
information and approach discussed in this notice, on other newly 
docketed information, and on the preliminary results of the detailed 
analyses presented in this notice.
    On March 8, 1996, EPA published a Federal Register notice 
pertaining to the air portions of the proposed rules, announced the 
availability of supplemental information, and proposed additional 
sources to be covered by the rulemaking (61 FR 9383). The comment 
period for that notice closed on April 8, 1996.
    The Agency has held numerous meetings on these proposed integrated 
rules with many of the stakeholders from the pulp and paper industry, 
including a trade association (American Forest and Paper Association, 
or AF&PA), numerous individual companies, consultants and vendors, 
environmental groups, labor unions, and other interested parties. 
Materials have been added to the Air and Water Dockets to document 
these meetings and to make available for public review new information 
received at those meetings.

II. EPA's Long-Term Environmental Goals

    The Agency envisions a long-term approach to environmental 
improvement that is consistent with sound capital expenditures. This 
approach, which is presented in today's notice, stems from extensive 
discussions with a range of stakeholders. The effluent limitations and 
air emissions standards are only one component of the framework to 
achieve long-term environmental goals. The overall regulatory framework 
also includes incentives to reward and encourage mills that implement 
pollution prevention beyond regulatory requirements.
    EPA's long-term goals include improved air quality, improved water 
quality, the elimination of fish consumption advisories downstream of 
mills, and elimination of ecologically significant bioaccumulation. An 
integral part of these goals is an industry committed to continuous 
environmental improvement--an industry that aggressively pursues 
research and pilot projects to identify technologies that work together 
appropriately to reduce, and ultimately eliminate, pollutant discharges 
for existing and new sources. A holistic approach to implementing these 
pollution prevention technologies would contribute to the long-term 
goal of minimizing impacts of mills in all environmental media by 
moving mills toward closed-loop process operations. Effective 
implementation of these technologies is capable of increasing reuse of 
recoverable materials and energy while concurrently reducing 
consumption of raw materials (e.g., process water, unrecoverable 
chemicals, etc.), and reducing generation of air emissions and 
hazardous and non-hazardous wastes. This combination of regulation, 
research, pilot projects, and incentives will foster continuous 
environmental improvement with each mill investment cycle.

III. Anticipated Schedule for Issuing Final Wastewater Standards

A. Schedule for Proposed Bleached Papergrade Kraft and Soda and 
Proposed Papergrade Sulfite Subcategories

    EPA will promulgate final effluent limitations and standards for 
the Pulp, Paper, and Paperboard industrial category in stages 
consisting of several subcategories at a time. For the following 
reasons, EPA intends to promulgate final effluent limitations and 
standards for the proposed bleached papergrade kraft and soda 
subcategory and the proposed papergrade sulfite subcategory before 
promulgating such limitations and standards for any other proposed 
subcategory.
    Under the consent decree entered in the case Environmental Defense 
Fund and National Wildlife Federation v. Thomas, Civ. No. 85-0973 
(D.D.C.), and subsequently amended, EPA was required to use its best 
efforts to promulgate regulations addressing discharges of dioxins and 
furans from 104 bleaching pulp mills by June 17, 1995. Despite making 
its best efforts, EPA was not able to promulgate final effluent 
limitations and standards for those subcategories by this date. 
However, EPA believes that regulating the discharge of dioxins and 
furans from those mills remains a very high priority and for this 
reason plans to promulgate effluent limitations and standards for mills 
in the proposed bleached papergrade kraft and soda subcategory and the 
proposed papergrade sulfite subcategory before it finalizes limitations 
and standards for the other proposed subcategories.

[[Page 36837]]

B. Scheduled for Proposed Dissolving Kraft and Dissolving Sulfite 
Subcategories

    EPA is evaluating the comments and preliminary new data affecting 
the proposed dissolving kraft and dissolving sulfite subcategories. The 
Agency anticipates that the final effluent limitations and standards 
for these subcategories will be based on different technologies than 
those that served as the basis for the proposed limitations and 
standards. For example, EPA has received data suggesting that oxygen 
delignification is not a feasible process for making some dissolving 
pulp products, particularly high grade products. In addition, some use 
of hypochlorite appears to be necessary to maintain product quality for 
some products. Affected companies have undertaken laboratory studies 
and mill trials to develop alternative bleaching processes and to 
document the effects on wastewater and air emissions. The Agency is 
working with these companies as their efforts progress.
    For these reasons, EPA does not expect to promulgate final effluent 
limitations guidelines and standards for these proposed subcategories 
in 1996. Even in the absence of these limitations and standards, 
however, EPA anticipates that alternative bleaching processes developed 
as a result of these studies and trials should contribute to 
substantial reductions in the generation and release of pollutants, 
when compared to current operating practices. Among the pollutants EPA 
expects to be reduced are chlorinated organic compounds (e.g., 
chloroform) in air emissions and wastewaters. EPA encourages mills in 
these subcategories to undertake and expeditiously complete 
developmental work that will facilitate installation of alternative 
process technologies that achieve these pollution prevention goals.

C. Schedule for the Remaining Proposed Subcategories

    EPA is assessing comments and data received since proposal for the 
remaining eight proposed subcategories. These eight proposed 
subcategories are: (1) Unbleached Kraft; (2) Semi-Chemical; (3) 
Mechanical Pulp; (4) Non-Wood Chemical Pulp; (5) Secondary Fiber Deink; 
(6) Secondary Fiber Non-Deink; (7) Fine and Lightweight Papers from 
Purchased Pulp; and (8) Tissue, Filter, Non-Woven, and Paperboard from 
Purchased Pulp. For example, EPA has received information from an 
industry-sponsored survey of secondary fiber non-deink mills. The 
Agency also has received additional data from mills in other proposed 
subcategories, including semi-chemical, unbleached kraft, and secondary 
fiber deink. EPA plans to promulgate effluent limitations guidelines 
and standards for these subcategories after promulgation of the final 
rules for the proposed bleached papergrade kraft and soda subcategory 
and the proposed papergrade sulfite subcategory.

IV. Post-Proposal Data Gathering

    EPA has gathered a substantial amount of new information and data 
since proposal. Much of this information was collected with the 
cooperation and support of AF&PA and the National Council of the Paper 
Industry for Air and Stream Improvement (NCASI), and with the 
assistance of many individual mills in the U.S. EPA also has gathered 
additional information from pulp and paper mills primarily in Canada 
and Europe. Some of the new information and data were generated through 
field sampling and related efforts at individual mills in the U.S., 
Canada, and Europe. The following paragraphs summarize some of these 
data gathering efforts.
    For the proposed bleached papergrade kraft and soda subcategory, 
EPA has new data for several technologies, including: complete chlorine 
dioxide substitution (without oxygen delignification); oxygen 
delignification (OD) or extended cooking plus complete chlorine dioxide 
substitution; extended cooking plus OD plus complete chlorine dioxide 
substitution; OD plus ozone bleaching plus complete substitution with 
chlorine dioxide; and totally chlorine-free (TCF) processes. EPA has a 
combination of bleach plant and end-of-pipe data for these 
technologies. (See the record at Document Control Number (DCN) 13951.)
    For the proposed papergrade sulfite subcategory, EPA has new bleach 
plant data for elemental chlorine-free processes and TCF processes. EPA 
also has information on trials for alternative processes beyond 
existing technologies for products that cannot be made with TCF 
processes. For example, EPA has data from trials using OD plus complete 
chlorine dioxide substitution for selected products.
    For the proposed dissolving kraft and dissolving sulfite 
subcategories, EPA has information on trials for alternative processes 
beyond existing technologies (e.g., reduction in use of hypochlorite, 
chlorine dioxide substitution with OD and without OD). EPA also has a 
preliminary evaluation of minimum hypochlorite usage necessary to 
maintain product quality.
    EPA has new information on several topics related to compliance 
cost estimation, such as process information and data for selected 
bleached chemical pulp mills and costs of process technology unit 
operations at selected mills. This information has been used by the 
Agency to verify its cost curves. EPA also has new information on best 
management practices, recovery systems, and equipment availability.

V. Regulatory Framework and Preliminary Results

A. Proposed Bleached Papergrade Kraft and Soda Subcategory

    For this subcategory and all others addressed in the proposal, the 
Agency proposed numerical effluent limitations guidelines and standards 
based on certain model technologies. Although EPA similarly will employ 
model technologies to calculate the final effluent limitations 
guidelines and standards, individual mills will be free to use any 
combination of technologies that will result in compliance with the 
final effluent limitations and standards.
1. Preliminary Conclusion Regarding Technology Basis for BAT
    After re-evaluating technologies for mills in the proposed bleached 
papergrade kraft and soda subcategory, EPA has determined that two 
technology options identified in the proposal merit careful 
consideration for effluent limitations based on best available 
technology economically achievable (BAT) and pretreatment standards for 
existing sources (PSES). These options include both in-plant process 
technologies (e.g., chemical substitution) and end-of-pipe biological 
treatment technologies (e.g., activated sludge systems). The first of 
these options is complete (100 percent) substitution of chlorine 
dioxide for chlorine as the key process technology. The second of these 
options is the technology basis from proposal, which includes oxygen 
delignification (OD) or extended cooking with complete (100 percent) 
substitution of chlorine dioxide for chlorine as the key process 
technologies. Although the final detailed analysis and decisions are 
not yet complete, the post-proposal analysis to date has demonstrated 
to the Agency that the first option--complete (100 percent) 
substitution of chlorine dioxide--should be given equal weight as a 
possible technology basis for the BAT effluent limitations and for PSES 
for this proposed subcategory. EPA anticipates that comments on this 
notice will assist in the final decision.

[[Page 36838]]

    EPA's preliminary evaluation of information and data for these two 
BAT/PSES options indicates that both options appear to reduce dioxins 
and furans in wastewaters to concentrations at or below the current 
analytical minimum levels. EPA also anticipates that both technology 
options would reduce discharges of dioxin such that the number of 
dioxin-based fish consumption advisories related to discharges from 
these facilities are likely to be substantially reduced or eliminated 
over time (depending on stream hydrodynamics of each site).
    The incremental environmental benefits that the Agency can 
attribute to the use of extended delignification (e.g., OD or extended 
cooking) in addition to complete (100 percent) substitution include 
reduced chronic toxicity to some aquatic life species. This reduced 
chronic toxicity is probably attributable to a reduction in mass 
loadings of certain nonchlorinated compounds that are indirectly 
measured by the bulk analytical parameter chemical oxygen demand (COD). 
The reduced chronic toxicity also may reflect an incremental reduction 
in the potential for formation of dioxin (2,3,7,8 TCDD) and furan 
(2,3,7,8 TDCF), which at many mills is no longer measurable by current 
analytical methods at the end-of-pipe, and a reduction in mass loadings 
of all chlorinated compounds which can be measured by the bulk 
analytical parameter adsorbable organic halides (AOX).
    EPA is continuing to carefully review and analyze the information 
and data pertinent to establishing effluent limitations guidelines and 
standards under the Clean Water Act. This includes an analysis of 
compliance costs and economic achievability. Results of these and other 
analyses, presented in preliminary form below, will be carefully 
considered along with comments in preparing the final rule.
2. Incentives for Further Environmental Improvements
    EPA is considering including compliance and enforcement incentives 
in the final regulations to recognize the achievements of those mills 
that use technology options more advanced than the technology option 
ultimately selected as BAT. If EPA chooses as the basis for the final 
BAT limitations and PSES complete (100 percent) substitution of 
chlorine dioxide for chlorine, without OD or extended cooking, 
qualifying technologies might include processes employing extended 
delignification (e.g., OD, extended cooking), ozone-based bleaching 
sequences, totally chlorine-free (TCF) bleaching, process wastewater 
flow reduction (i.e., technologies which move mills toward closed loop 
operation), or other combinations of technologies. Many of these 
technologies also would qualify for incentives if EPA includes an 
extended delignification process as part of BAT. All of these 
technologies are already being implemented at some mills while further 
developmental work is ongoing to improve the performance of these 
technologies.
    EPA is considering establishing two sets of incentives for further 
environmental improvements. The structure, with some variations, would 
apply regardless of the baseline BAT technology options ultimately 
selected. The first set of incentives would provide interested mills 
with additional time--up to 15 years beyond the effective date of these 
rules--to meet limitations more stringent than those based on the 
baseline BAT. This set of incentives would be available to any mill 
that voluntarily selects, as its BAT, technologies that can achieve 
more stringent effluent limits set forth in the incentives approach. 
The various incentives-related BAT limitations and standards would be 
codified in the Code of Federal Regulations and would represent BAT 
limitations for any mill choosing to participate in the incentives 
program. The second set of incentives, which could include various 
monitoring, enforcement, and public recognition elements, would be 
available only after compliance with the more stringent incentive-
related BAT limits and standards is achieved. Any incentives adopted by 
EPA would be intended to encourage mills to investigate, develop, and 
implement technologies that are more advanced and that achieve more 
stringent limitations and standards than the technologies now being 
considered as the basis for baseline BAT limitations.
    EPA has already received suggestions from several stakeholders on 
possible incentives. Details regarding the possible incentives are 
discussed in Section X of this notice. EPA solicits comments on this 
approach and invites specific ideas for incentives. EPA solicits 
comments on extending this approach to indirect dischargers. Such 
comments and suggestions would be considered as EPA formulates the 
final rule for the proposed bleached papergrade kraft and soda and 
papergrade sulfite subcategories.
3. Technology Options for BAT
    As noted above, the post-proposal analysis focuses on two process 
technology options. The first option, referred to as Option A, employs 
conventional pulping processes followed by complete (100 percent) 
substitution for elemental chlorine by chlorine dioxide. This is an 
elemental chlorine-free (ECF) technology.
    The second option, referred to as Option B, employs oxygen 
delignification (OD) and/or extended cooking (EC), followed by complete 
(100 percent) substitution which reduces the lignin content of 
unbleached pulp beyond that typically provided through conventional 
pulping processes. The effectiveness of pulping processes in removing 
lignin is indicated by the unbleached pulp kappa number. A kappa number 
typical of unbleached pulp from traditional pulping processes for 
softwoods is approximately 30 and for hardwoods is approximately 20. 
Extended delignification processes (such as OD or EC) typically produce 
unbleached softwood pulps with an approximate kappa number of 15 
(approximately 10 for hardwoods). Option B also is an ECF technology.
    In analyzing performance for Option B, the Agency is considering 
performance data for mills with OD and/or EC. This analysis differs 
from proposal when the Agency distinguished between extended 
delignification sequences with only OD or EC, and sequences with both 
OD and EC.
    This notice presents EPA's preliminary analysis of data pertaining 
to Option A and compares it to Option B. In addition to obtaining and 
analyzing data pertaining to Options A and B, the Agency also has 
endeavored to obtain and analyze additional data for TCF process 
technologies as a possible BAT technology. TCF technologies typically 
incorporate OD while relying on peroxide and/or ozone, rather than 
chlorine-containing compounds, to accomplish pulp bleaching and 
brightening. Only one U.S. bleached papergrade kraft mill employs a TCF 
process, and it produces a market pulp of somewhat less than full 
market pulp brightness. Since proposal of this rule, the U.S. bleached 
papergrade kraft TCF mill has achieved higher brightness targets, but 
still less than full market brightness pulp of approximately 90 ISO. 
EPA obtained bleach plant performance data from this mill, but because 
the mill discharges to territorial seas under Section 301(m) of the 
Clean Water Act and thus does not employ secondary treatment, end-of-
pipe data reflecting the performance of biological treatment were not 
available. European TCF mills have achieved at or near full market 
brightness pulps for limited periods. However, EPA consistently

[[Page 36839]]

requested but obtained only limited process and pollutant removal 
performance data for TCF mills in Europe. The limited range of 
papergrade TCF products currently produced and sold in the U.S. market 
indicates that TCF technology is not yet available to make the full 
range of products produced by ECF or similar chlorine-based processes. 
Nonetheless, EPA continues to strongly encourage further development 
and implementation of TCF technologies and products. It is also 
probable that all TCF mills would qualify for the advanced technology 
incentives program described below; this should provide an opportunity 
to stimulate production and U.S. market share for TCF products.
    The Agency considered other technology options in developing the 
proposed regulations for the proposed bleached papergrade kraft and 
soda subcategory. However, for reasons cited in the proposal, these 
technologies were not selected as the underlying process technologies 
for the proposed effluent limitations based on BAT, and have not been 
further pursued as options for the final rule.
4. Framework for PSES
    In the proposal, EPA discussed three options for pretreatment 
standards for existing sources (PSES) for four proposed subcategories, 
including bleached papergrade kraft and soda. These options primarily 
concern end-of-pipe limitations for indirect dischargers. The 
conclusions in the discussion of BAT technology options also apply to 
technology options for bleach plant limits for indirect dischargers. 
See Section VIII of today's notice for a discussion of PSES options.
5. Pollutant Parameters
    In the proposed regulations, EPA included both in-process (bleach 
plant) and end-of-pipe BAT limitations and PSES for mills that bleach 
chemical pulps covered in four proposed subcategories, including 
bleached papergrade kraft and soda.
    The parameters proposed to be controlled at the bleach plant were 
2,3,7,8 TCDD (``dioxin''), 2,3,7,8 TCDF (``furan''), 12 specific 
chlorinated phenolic compounds, and the volatile organic pollutants 
chloroform, methylene chloride, methyl ethyl ketone (MEK), and acetone. 
With respect to the proposed bleached papergrade kraft and soda and 
papergrade sulfite subcategories, EPA is considering codifying limits 
for all of these pollutants except for methylene chloride, MEK, and 
acetone. Based on EPA's most current data, the presence of these 
pollutants or the levels at which they are found does not appear to be 
directly related to any of the pollution prevention process 
technologies being considered (extended delignification processes, such 
as extended cooking or oxygen delignification, or bleaching process 
changes, such as complete substitution for elemental chlorine by 
chlorine dioxide and elimination of hypochlorite). Acetone and MEK 
generally are amenable to biological treatment, while other forms of 
end-of-pipe physical treatment, for the concentrations levels involved, 
are likely to be costly. Methylene chloride has been found to be a 
sample and laboratory contaminant in certain cases. Therefore, EPA 
cannot at this time identify a pollution prevention basis for setting 
effluent limitations and standards for these pollutants for these 
proposed subcategories.
    The parameters proposed to be controlled at the end-of-pipe were 
adsorbable organic halides (AOX), chemical oxygen demand (COD), and, 
for the proposed bleached papergrade kraft and soda subcategory only, 
color. EPA received comments asserting that neither AOX nor COD is an 
appropriate parameter to be controlled because, among other reasons 
cited, these parameters are not directly related to environmental 
effects or effluent toxicity. Commenters also asserted that color 
should not be controlled because it is an aesthetic concern more 
appropriately addressed in individual permits based on applicable water 
quality standards.
    EPA continues to believe that AOX is a valid measure of the total 
chlorinated organic matter in wastewaters resulting from the bleaching 
of pulps. Although statistically significant relationships between AOX 
and a broad range of specific chlorinated organic compounds have not 
been established, trends in concentration changes, however, have been 
observed between AOX and specific pollutants, including dioxin, furan, 
and chlorinated phenolic compounds. Even though dioxin and furan are no 
longer measurable at the end-of-pipe at many mills, the potential for 
formation of these pollutants continues to exist at pulp and paper 
mills as long as any chlorine-containing compounds (including chlorine 
dioxide) are used in the bleaching process. Final effluent AOX loading 
is an appropriate measure of the performance of in-process and end-of-
pipe technologies in reducing the mass of chlorinated organic 
pollutants such as dioxin and furan found in wastewaters discharged by 
this industry. Thus, EPA expects that process changes and treatment 
technologies implemented to reduce AOX discharges at the end of the 
pipe will in turn further reduce the likelihood of the formation and 
discharge of these chlorinated organic pollutants. The analytical 
method for this bulk parameter is also very reliable and affords 
significant savings in monitoring costs over analytical methods for 
individual pollutants, which are substantially more expensive.
    With regard to COD, the Agency notes that chronic sub-lethal 
aquatic toxicity has been found from wastewaters discharged by both 
bleached and unbleached pulp mills. Some evidence indicates that this 
toxicity is associated at least in part with families of non-
chlorinated organic materials. Some of these materials are probably 
wood extractive constituents found in pulping liquors and are 
refractory or resistant to rapid biological degradation, and thus are 
not measurable by the five-day biochemical oxygen demand (BOD5) 
analytical method. Several studies indicate that as wastewater COD is 
reduced, indices of these chronic toxicity effects also are reduced. In 
addition, final effluent COD loading is an appropriate measure of the 
performance of in-process and end-of-pipe technologies in reducing the 
mass of non-chlorinated pollutants found in wastewaters discharged by 
this industry. EPA also has found that COD is an appropriate parameter 
for use by mills for self-monitoring to evaluate the performance of 
spent pulping liquor spill prevention programs (BMPs), as noted in 
Section V.A.6 below. The analytical method for this bulk parameter also 
is very reliable and affords significant savings in monitoring costs 
over analytical methods for individual pollutants.
    In evaluating comments on the proposal EPA has endeavored to obtain 
additional data that would supplement the current COD data base for 
setting final effluent limitations and standards. This supplemented 
data base would allow EPA to determine the need and, if appropriate, 
the basis for COD loadings allowances from other contributing sources 
on-site at mills, such as paper machines and semi-chemical pulping. EPA 
has received very limited (and, for some operations, insufficient) data 
to characterize COD loadings from these mill operations. Further, EPA 
has received only limited additional data to determine the combined 
performance of well designed and operated spill prevention programs 
(BMPs), process changes, and end-of-pipe biological treatment systems 
in removing COD. Moreover, data that are now available indicate a 
significant

[[Page 36840]]

range of values that may not accurately reflect the best performance of 
these technologies. (See the record at DCN 13958.) EPA solicits 
additional data that would further define the best performance of these 
technologies and provide a basis for EPA to assess the need for 
allowances for other on-site sources of COD and to develop such 
allowances if appropriate. EPA will evaluate any COD data and public 
comments received in response to this notice in establishing final 
limits and standards for this parameter for ECF and TCF mills. EPA also 
is considering whether it is appropriate that final COD limits and 
standards for ECF and TCF mills in the proposed bleached papergrade 
kraft and soda and papergrade sulfite subcategories should be deferred 
and developed concurrently with BAT COD limits that may be developed 
for other subcategories in a later rulemaking.
    With regard to color, the Agency notes that some mills receive 
limitations for color in their National Pollutant Discharge Elimination 
System (NPDES) permits where stream water quality requires such 
limitations. The Agency is considering not promulgating a technology-
based limit for color, but rather deferring control of color to 
individual permits where necessary to implement water quality standards 
under CWA Section 301(b)(1)(C).
6. Best Management Practices
    In the proposed regulations, EPA included provisions for leak and 
spill prevention, containment, and control through best management 
practices (BMPs). The public comments on the proposal generally support 
the use of BMPs, although some commenters challenged the details of 
these provisions. EPA plans to incorporate BMPs into the final rule 
with substantial restructuring of the program that was proposed. EPA 
anticipates that the BMPs in the final rule will apply to mills in the 
proposed bleached papergrade kraft and soda and papergrade sulfite 
subcategories. EPA also anticipates that the revised BMPs also will 
apply, as proposed, to mills in other chemical pulping subcategories 
(e.g., semi-chemical, unbleached kraft). Additional details about BMPs 
are presented in Section VII of today's notice.
7. Costs for Options A and B
    EPA has used additional cost information and data to update its 
costing methodology. EPA has used costs for recently installed 
equipment at U.S. mills as well as vendor information to update cost 
curves and model algorithms for both capital costs and operation and 
maintenance (O&M) costs. EPA has updated mill specific information and 
has estimated compliance costs for Options A and B. EPA used these 
revised cost estimates to estimate economic impacts; the revised 
economic results are discussed in Section V.A.12 of today's notice. 
Reports included in the record contain detailed cost information (see 
DCN 13953).
    Much of the cost data EPA is considering was submitted by AF&PA. 
One of the most significant sources of differences in costs developed 
by AF&PA and EPA are the assumptions regarding the impact on recovery 
boiler operation. EPA has investigated the differing assumptions and 
revised its cost analysis for selected boiler capacity and related 
recovery cycle components. EPA's preliminary findings are that 
relatively inexpensive boiler upgrades will accommodate OD filtrate 
streams and other increases in heat load. EPA's analysis of each mill 
in this proposed subcategory indicates that boiler replacement will not 
be necessary with the installation of OD as defined in Option B.
    The Agency's revisions to the costing methodology to reflect new 
information about the recovery cycle include, where appropriate, boiler 
upgrades, pulping process modifications, black liquor oxidation, and 
evaporator upgrades. Additional information about these cost components 
is presented in the record (see DCN 13959).
    EPA also relied on new data and information to revise costs for 
BMPs. The new data were used to revise design assumptions and cost 
model algorithms for developing mill-specific costs for BMP upgrades. A 
significant increase in costs for BMPs resulted.
    EPA also revised its analysis for changes in the cost of chemicals 
and other raw materials used in pulp mills and bleach plants. Costs for 
some of these raw materials and chemicals have increased while costs 
for other raw materials and chemicals have decreased. The net effect of 
these changes on total option costs varies among mills.
    EPA updated its process information for each mill by reviewing 
comments on the proposed rule, information gathered by AF&PA and NCASI, 
other publicly available information, and by contacting mills directly. 
EPA considered process changes and upgrades or renovations either 
completed, underway, or committed to as of mid-1995. Costs in this 
notice are presented in 1995 dollars. EPA used the updated information 
for each mill, along with the costing methodology revisions, to 
determine the need for and the sizing of process change unit operations 
for Options A and B. The result of this mill-specific costing is 
summarized in Table 1.

  Table 1.-- Capital, O&M, and Total Annualized Costs for BAT and BMPs  
------------------------------------------------------------------------
                                           Costs        Current cost    
                                         estimated        estimates     
                                             at    ---------------------
                                          proposal                      
                                            for                         
                                          Option B   Option A   Option B
                                         (proposed                      
                                         Option 4)                      
------------------------------------------------------------------------
Capital ($ million)....................   2,184        998      2,036   
O&M ($ million/yr).....................      11.8      109        (7)   
Total Annualized Costs:                                                 
  (million/yr).........................     223.2      140        155   
  ($/UBMT).............................       7.50       4.78       5.27
------------------------------------------------------------------------

8. Effluent Reduction Benefits
    EPA has updated the calculation of effluent reduction benefits for 
each bleached papergrade kraft and soda mill to a new baseline of mid-
1995. In addition, EPA has revised and simplified the methodology used 
to estimate that baseline. The baseline calculation methodology 
revisions along with details of the effluent reduction calculations are 
described in the record (see DCN 13592). The following

[[Page 36841]]

highlights are changes from the proposal based on comments and new 
information.
    First, EPA used data characterizing the generation of pollutants by 
a variety of pulping and bleaching technologies and information about 
the pulping and bleaching technologies at each mill and associated 
wastewater flow data to characterize the pollutant loads generated as 
of mid-1995. EPA also used data for individual mills from the NCASI 
1994 Dioxin Profile (see DCN 13764) to estimate the effluent load of 
2,3,7,8-TCDD and 2,3,7,8-TCDF. The revised baselines, which were found 
to be comparable to NCASI's industry-wide estimates, were used to 
calculate effluent reduction benefits, summarized in Table 2. These 
calculated reduction benefits are virtually the same for both options. 
It is interesting to note that the baseline annual discharge loading in 
1992 was 70 grams/year of 2,3,7,8 TCDD and 341 grams/year of 2,3,7,8 
TCDF (total of 411 grams/year). The reduction since 1992 to estimated 
discharge loadings of 3-4 grams/year for 2,3,7,8 TCDD and 3-4 grams/
year for 2,3,7,8 TCDF in mid-1995 represents a reduction of 95 percent 
for 2,3,7,8 TCDD and 99 percent for 2,3,7,8 TCDF.

 Table 2.--Baseline Discharges and Estimated Reductions of Selected Pollutants for Bleached Papergrade Kraft and
                                                   Soda Mills                                                   
----------------------------------------------------------------------------------------------------------------
                                                                                     Estimated       Estimated  
                                                                                    reductions      reductions  
                       Pollutant parameter                           Baseline      from baseline   from baseline
                                                                     discharge     attributable    attributable 
                                                                                    to Option A     to Option B 
----------------------------------------------------------------------------------------------------------------
2,3,7,8-TCDD (g/yr).............................................              15              11              12
2,3,7,8-TCDF (g/yr).............................................              93              89              90
AOX (kkg/yr)....................................................          35,000          24,700          30,600
----------------------------------------------------------------------------------------------------------------

9. Revised Effluent Limitations
    a. Changes to Statistical Methodology.
    In developing the BAT limitations presented in today's notice, EPA 
included the new data discussed in Section IV to calculate the revised 
effluent limitations. EPA also made four changes to the proposed 
statistical methodology. First, EPA determined that limitations set at 
non-detect (ND) levels could be justified in some situations where the 
data included detected measurements. In the proposal, EPA had set ND 
limitations only when the data were all non-detected measurements or 
were detected below the minimum level of the analytical method. In 
today's notice, TCDF, chloroform, and AOX have numerical BAT 
limitations. The remaining analytes have ND limitations. Second, EPA 
determined that the value of half of the sample-specific detection 
limit should be substituted for all non-detect measurements. In the 
proposal, EPA had used a methodology for substituting a lower value for 
anomalously large detection limits. Third, EPA calculated bleach plant 
limitations for TCDF and chloroform by aggregating the acid and 
alkaline measurements prior to calculating the limitations. In the 
proposal, EPA had calculated separate production-normalized mass 
limitations for the acid and alkaline streams and then summed the two 
for an overall production-normalized mass bleach plant limitation. 
Fourth, EPA calculated a concentration-based limitation for TCDF. In 
the proposal, EPA had calculated a production-normalized mass-based 
limitation for TCDF. Fifth, EPA adjusted for autocorrelation in the AOX 
limitations by using BOD autocorrelation factors. In the preamble to 
the proposed rules, EPA requested additional AOX data that would allow 
for evaluating autocorrelation in daily AOX measurements. The AOX data 
that EPA has received are insufficient for the purpose of evaluating 
the autocorrelation in Options A and B. Adjustment for positive 
autocorrelation appropriately leads to larger numerical values for 
limitations. EPA believes that positive autocorrelation is likely to be 
present in daily measurements of AOX and has adjusted the AOX monthly 
average limitations using observed autocorrelation in BOD measurements. 
The numerical values of the AOX daily maximum and monthly average 
limitations for both options in today's notice are larger than the 
proposed limitations.
    EPA has provided additional documentation in the record on the 
changes made to the BAT statistical methodology (see DCN 13963). The 
information added to the record also includes the time series analysis 
used in calculating the proposed BCT limitations; methodology used to 
aggregate data collected from different sample points; errata to the 
statistical support document; and the detailed results of the 
statistical analyses.
    b. Revised Effluent Limitations Being Considered. Table 3 presents 
the proposed limitations and the preliminary results of revising bleach 
plant effluent limitations for Options A and B.

                      Table 3.--Bleached Papergrade Kraft and Soda Bleach Plant Limitations                     
----------------------------------------------------------------------------------------------------------------
                                                Daily Maximum Limitation              Monthly Average Limitation
                                   --------------------------------------------------              a            
                                                                                     ---------------------------
                                                                                         As                     
                                     As proposed for     Option A        Option B     proposed   Option   Option
                                        Option B                                         for       A        B   
                                                                                      Option B                  
----------------------------------------------------------------------------------------------------------------
TCDD..............................  ND                ND              ND                   N/A      N/A      N/A
TCDF (pg/l).......................  359               24.1            24.1                 N/A      N/A      N/A
                                    (ng/kkg)                                                                    
Chlorinated Phenolics.............  ND b              ND              ND                   N/A      N/A      N/A
Chloroform (g/kkg)................  5.06              5.33            5.33                2.01  2.80  c   2.80 c
----------------------------------------------------------------------------------------------------------------
a Where the monitoring frequency was proposed to be once a month, the monthly average limitation would not be   
  applicable (N/A).                                                                                             

[[Page 36842]]

                                                                                                                
b Limits > ND for two pollutants (trichlorosyringol and 2,4,6-trichlorophenol)(mg/kkg).                         
c Limits based on low air-flow low-flow (pressure or diffusion) pulp washers in bleach plants.                  


    Table 4 presents the proposed limitations and the preliminary 
results of revising end-of-pipe effluent limitations for AOX. 
Additional data from two mills representing Option A were submitted by 
the industry but not with sufficient lead time to allow EPA to complete 
all analyses necessary to use that data in this notice. Results of 
analyses for these additional data sets will be incorporated as 
appropriate in the final rule. Listings of these additional data sets 
are provided in the record (see DCNs 13960, 13961).

      Table 4.-- Bleached Papergrade Kraft and Soda End-of-Pipe AOX     
------------------------------------------------------------------------
                                                 As                     
                                              proposed   Option   Option
                                                 for     A (kg/  B  (kg/
                                              Option B    kkg)     kkg) 
------------------------------------------------------------------------
Long-Term Average...........................     0.143    0.413    0.153
Monthly Average Limitation..................     0.156    0.448    0.162
Daily Maximum Limitation....................     0.267    0.769    0.236
------------------------------------------------------------------------

    Table 5 presents the proposed limitations and the preliminary 
results of revising end-of-pipe effluent limitations for COD. The 
revised limitations reflect additional data submitted by the industry 
since proposal. However, as noted previously in this notice, the 
supplemented database upon which the revised limitations are based 
includes only limited data to determine the need for and magnitude of 
end-of-pipe COD allowances for on-site sources other than pulping and 
bleaching (e.g., paper machines, semi-chemical pulping). Therefore, 
while the revised COD limitations presented in Table 5 have been 
developed reflecting only market pulp operations, EPA intends that 
final COD limitations reflect integrated mills, both ECF and TCF. Table 
5 includes a range of possible LTA values for an integrated mill based 
on the market pulp LTA plus a range of paper machine allowances 
(presented as such due to limitations of currently available data). EPA 
also is concerned that the limited COD data currently available for 
market pulp operations may not represent the best performance of BMPs 
and end-of-pipe biological treatment systems. Additional details on 
these preliminary revised COD limitations and underlying data sets are 
provided in the record (see DCN 13958).

Table 5.--Bleached Papergrade Kraft and Soda Subcategory End-of-Pipe COD
------------------------------------------------------------------------
                                      As                                
                                   proposed  Option A  (kg/   Option B  
                                      for         kkg)        (kg/kkg)  
                                   Option B                             
------------------------------------------------------------------------
Long-Term Average:                                                      
  Market Pulp Only Integrated       NA 21.3  38.2 44-61 a   25.5 31-48 a
   Mills.                                                               
Monthly Average Limitation:                                             
  Market Pulp Only Integrated       NA 25.4  45.6 b TBD     30.4 b TBD  
   Mills.                                                               
Daily Maximum Limitation:                                               
  Market Pulp Only Integrated       NA 35.7  64.0 b TBD     42.7 b TBD  
   Mills.                                                               
------------------------------------------------------------------------
a Market pulp plus range of values for paper machine allowances.        
b Derived with same variability factors used for proposed limits.       
TBD To Be Developed--insufficient data at this time.                    

    In the proposal, the end-of-pipe ``annual average'' limitation for 
non-continuous dischargers was set equal to the long-term average. The 
daily maximum limitation applies to both continuous and non-continuous 
dischargers. The monthly average limitations apply only to continuous 
dischargers.
    EPA is considering a change in the regulatory language defining 
non-continuous dischargers (see the general definitions section of the 
proposed regulation, at Sec. 430.01 (k)). The proposed definition 
focuses on wastewaters stored for periods greater than 24 hours and 
released on a batch basis. Alternative language being considered by EPA 
describes the same non-continuous discharge patterns but focuses on 
wastewaters stored for periods as required by NPDES authorities and 
released on a variable flow or pollutant loading rate basis to protect 
receiving water quality. EPA solicits comments, particularly from NPDES 
authorities, on whether this change in emphasis is appropriate.
10. Conventional Pollutant Limitations (BPT and BCT)
    EPA proposed to revise effluent limitations based on the best 
practicable control technology currently available (BPT) for all of the 
proposed subcategories, including bleached papergrade kraft and soda. 
EPA highlighted several controversial issues concerning the BPT 
limitations, their calculation, and their interpretation. EPA also 
presented a rationale, methodology, and related controversies for 
establishing limitations based on the best conventional pollutant 
control technology (BCT).
    Although the Agency believes that it has the statutory authority to 
revise BPT, the Agency also believes that it has the discretion to 
determine whether to revise BPT effluent limitations guidelines in 
particular circumstances.
    For the final rule, the Agency is currently considering exercising 
its discretion not to revise BPT. Where more stringent effluent 
limitations for conventional pollutants pass the BCT cost test, EPA 
would revise BCT in this rulemaking. EPA is likely to apply this same 
discretion and reliance on the BCT cost test to final rules for this 
entire industry, not just the proposed bleached papergrade kraft and 
soda subcategory. EPA solicits comment on this approach.
    The Agency also is carefully reviewing comments claiming that 
certain of the data sets used to establish the proposed revised 
conventional pollutant effluent limitations do not accurately represent 
secondary biological treatment technology. EPA also has received a 
suggestion from AF&PA regarding a different approach for identifying 
mills having secondary treatment for purposes of performing the BCT 
cost reasonableness test. This approach suggests that EPA's secondary 
treatment regulations applicable to POTWs (see 40 CFR 133.101(m)) 
provide a basis for determining which mills performing at levels beyond 
secondary treatment should be excluded from EPA's BCT analysis. See the 
record at DCN 14047. If EPA were to adopt this approach, datasets for 
certain mills asserted to represent more stringent performance than 
secondary treatment would be removed from the conventional pollutant 
database and the ensuing BCT cost reasonableness test. EPA solicits 
comments on this possible approach, particularly with respect to the 
use of 40 CFR 133.101(m) for this purpose. In response, EPA has made 
some adjustments to the data sets used to characterize effluent 
loadings of conventional pollutants typical of secondary biological 
treatment as applied in the proposed bleached papergrade kraft and soda 
subcategory. Additional discussion of the BCT datasets and calculations 
are in the record (DCN 13954). Table 6

[[Page 36843]]

summarizes the changes to the long-term average performance for the BCT 
options resulting from these adjustments.

   Table 6.--Bleached Papergrade Kraft and Soda Subcategory Long-Term   
               Average Performance Levels for BCT Options               
------------------------------------------------------------------------
                                                          BOD5     TSS  
                                                         Long-    Long- 
                                                          Term     Term 
                                                        Average  Average
                                                          (kg/     (kg/ 
                                                         OMMT)    OMMT) 
------------------------------------------------------------------------
Proposal Option 1 (average of the best 90%)...........     2.65     4.46
Proposal Option 2 (average of the best 50%)...........     1.57     2.72
Revised Option 1 (average of the best 90%)............     2.73     4.41
Revised Option 2 (average of the best 50%)............     1.73     2.73
------------------------------------------------------------------------

11. Technology Options for NSPS
    For New Source Performance Standards (NSPS) in the proposed 
bleached papergrade kraft and soda subcategory, EPA is considering a 
minor revision to the proposed technology option. The likely technology 
basis will be Option B, described in Section V.A.3. This option 
includes extended delignification generally, including OD and/or 
extended cooking to produce softwood pulps with a kappa number of 
approximately 15 (approximately 10 for hardwoods) followed by complete 
(100 percent) substitution by chlorine dioxide for bleaching.
    EPA's data do not indicate performance differences between the 
proposed NSPS option (then, Option 5) and the option being considered 
today. EPA plans to use performance data from both of these options to 
establish NSPS effluent limitations for priority and nonconventional 
pollutants for the final rule.
    For NSPS for conventional pollutants, EPA proposed effluent 
limitations based on best demonstrated end-of-pipe secondary wastewater 
treatment. EPA used the treatment system with the lowest long-term 
average BOD discharge to characterize the best demonstrated 
performance. EPA's position is that the best existing performance can 
be achieved (or surpassed) by new facilities as demonstrated by 
recently built mills in Canada and Scandinavia. EPA has reviewed 
comments and the supplementary information gathered since proposal and 
is now considering the best existing performance as characterized by 
the average of the best 50 percent of the existing mills in the 
subcategory. Based on that review of the supplemented database and 
other information available to date, EPA believes this may be a more 
appropriate representation of the best existing performance for mills 
in the proposed bleached papergrade kraft and soda subcategory because 
the single best mill does not account for all sources of process-
related variability expected in the entire subcategory, including raw 
materials (i.e., furnish), process operations, and final products.
12. Revised Economic Impact Results
    a. Revisions to the Economic Analysis. The Agency plans to base its 
decisions regarding the economic achievability of BAT and other cost 
considerations on several revisions since proposal. First, the revised 
economic impacts for the proposed bleached papergrade kraft and soda 
subcategory will be based on the revised mill-specific engineering 
costs described in Section V.A.7 of today's notice.
    EPA also has revised the economic methodology to account for 
changes that have occurred in the industry. Some of these changes are 
summarized below; additional discussion is in the record (see Section 
27.0). At proposal, EPA used both a financial model, which estimated 
facility closures and production changes, and a market model, which was 
used to estimate price and production effects. Though not fully 
integrated, these models validated each other's results. Between 1989 
and 1995, the industry underwent a period of intensive capital 
investment, some for pollution control, but mostly to increase 
production and to change product lines. During this period, a full 
industry cycle was completed, with pulp mill revenues peaking in 1988, 
falling through 1992, and reaching new heights in 1995 as the capacity 
expansions of 1988-1991 were fully exploited. This same period was also 
one of considerable industry consolidation, with almost 15 percent of 
the facilities being acquired by others in the industry. In addition, 
several facilities ceased operation, while several new ones opened. EPA 
plans to update its financial profile of facilities that have changed 
ownership and to use those updates in the economic analysis.
    As a result of the industry's changes, EPA believes that the market 
model used at proposal--based on information obtained in the 1989 
survey--no longer provides reliable economic information. EPA does not 
plan to update the market model, which would only be possible through a 
new survey of every mill and all product lines. Instead, EPA plans to 
incorporate some features of the market model, particularly product 
supply and demand elasticities, into the financial model.
    The financial model will incorporate several additional changes to 
bring it up to date. For example, EPA is adjusting the start year of 
the model to 1996, which will reflect changes in prices, inflation, 
interest rates, and position in the pulp and paper industry cycle. 
Additionally, EPA plans to adjust the industry cycle used for the 
closure analysis in order to incorporate 1995 financial data. The 
revised cycle will be seven years instead of the six year cycle used at 
proposal. EPA also plans to adjust interest rates to reflect changes in 
industry borrowing costs. EPA used a 7 percent rate in the analyses 
reported in this notice.
    EPA also plans to incorporate a cost pass-through or price change 
parameter into the model to improve estimates of the effects of 
closures on pulp and paper production. Although the results presented 
in today's notice assume no price increases (as assumed at proposal), 
this new feature will provide a more accurate estimate of the degree to 
which increased costs are passed through to consumers. Hence, various 
assumptions about cost pass-through will be considered when the Agency 
makes final decisions about economic impacts.
    b. Economic Impacts of BAT Options A and B. The economic impact 
analysis will continue to use the three forecasting methods and the 
composite scoring technique used at proposal to predict mill closures. 
The revised economic impacts discussed in today's notice are based on 
an analysis of 85 bleached papergrade kraft and soda mills (76 direct 
dischargers and nine indirect dischargers). The compliance costs 
summarized here are expressed in 1995 dollars. The Agency has not yet 
completed its analysis of the combined impact of all components of the 
Cluster Rules (e.g., BAT, BCT, BMP and MACT) for this subcategory. The 
Agency plans to estimate economic impacts for the compilation of all 
compliance costs and will consider those results in making decisions 
for the final rules.
    The total annualized costs (expressed as a sum of after-tax, or 
private, costs to each mill) for BAT and PSES for Option A are $140 
million. One mill is predicted to close with associated losses of 
approximately 500 jobs (1.3 percent of bleached papergrade kraft and 
soda mills and 0.6 percent of subcategory employment).
    For Option B, total annualized costs for BAT and PSES are $155 
million. Three mills are predicted to close with associated losses of 
approximately 4,100

[[Page 36844]]

jobs (3.5 percent of bleached papergrade kraft mills and about 5 
percent of subcategory employment).
    c. Cost-Effectiveness. The Agency has revised the cost-
effectiveness analysis for BAT and PSES to reflect the revised 
estimates of costs and pollutant reductions. In addition, the Agency 
has expanded its cost-effectiveness analysis since proposal to include 
two cost bases: pre-tax and after-tax compliance costs. The Agency uses 
pre-tax costs, which consider industry compliance costs as well as 
reductions in state and federal tax revenues occasioned by these costs, 
as a measure of direct social costs. After-tax costs are used to 
estimate the direct private costs to the regulated industry. While the 
after-tax cost basis was the only result presented for cost-
effectiveness at proposal, both sets of results have been calculated 
and presented in the revised cost-effectiveness analysis. The 
additional set of results responds to comments and to policy 
discussions concerning cost-effectiveness ratios. Although AOX is 
likely to have an effluent limit in the final rule (see section V.A.5 
of this notice), AOX reductions are not included in the cost-
effectiveness ratios. This remains unchanged since proposal. Additional 
details about the cost-effectiveness analysis are in the record (See 
Section 26).
    For BAT, the cost-effectiveness ratios using pre-tax compliance 
costs are $12 (Sec. 1981) per pound-equivalent removed for Option A and 
$11 per pound-equivalent removed for Option B. For PSES, the cost-
effectiveness ratios are $12 per pound-equivalent removed for Option A 
and $16 per pound-equivalent removed for Option B, and $78 per pound-
equivalent for the increment of Option A to Option B.
    The cost-effectiveness ratios for Options A and B are very close 
and within the bounds of accuracy of EPA's costing analysis and data 
available for loadings estimates. The Agency solicits comment on 
whether these differences are meaningful for purposes of comparing the 
options. The relative costs for implementing Options A and B will 
differ among mills. The cost-effectiveness analysis is not presented as 
mill-specific results, but instead, the analysis is conducted on 
aggregate annualized compliance costs for direct and indirect 
dischargers in this subcategory.
    When the costs of Options A and B are compared on a pre-tax, 
annualized basis, Option B is slightly less expensive than Option A for 
the sum of all direct dischargers in this subcategory. Such a result 
might appear counter-intuitive because Option B is a more capital 
intensive option. This outcome occurs because, compared to industry 
process technologies in place in 1995, implementing oxygen 
delignification reduces operating costs at certain mills. At some of 
these mills, the operation and maintenance cost savings of Option B are 
sufficiently large that they outweigh that option's higher capital 
costs.
    In calculating annualized costs, the Agency used fixed assumptions 
about discount rates (OMB's preferred 7 percent real rate) and tax 
shields (including depreciation and deductions for operation and 
maintenance costs), both of which may differ among mills due to the 
firms' differing capital (borrowing) costs. The significantly greater 
capital costs for Option B may be unachievable within normal compliance 
periods for firms with higher borrowing costs or more limited access to 
credit.
    The Agency notes that there may be additional impacts associated 
with mill closures, such as job losses and related displacement costs 
(see Record Section 17, DCN 08587, pp. 5-5 to 5-6) that are not part of 
the cost-effectiveness calculation, but which are considered by the 
Agency when evaluating the economic achievability of options.

B. Proposed Papergrade Sulfite Subcategory

    EPA is considering revisions to the proposed papergrade sulfite 
subcategory. EPA received comments that criticized the proposed 
effluent limitations for their inapplicability to specialty grade pulps 
and to ammonium-based pulping processes. Commenters also asserted that 
the proposed technology basis, which was totally chlorine-free (TCF) 
bleaching, is not feasible for certain products and processes.
1. Preliminary Conclusions Regarding Technology Basis for BAT
    EPA is carefully reviewing the demonstration and feasibility of 
proposed effluent limitations and standards for all mills in the 
proposed papergrade sulfite subcategory. Preliminary conclusions are 
that certain specialty grade pulps have not been produced using totally 
chlorine-free bleaching, and that totally chlorine-free bleaching has 
not been demonstrated to be universally applicable to pulps made by 
ammonium-based processes. Therefore, the Agency is considering 
segmenting this proposed subcategory to better reflect the product 
considerations, the variation of manufacturing processes, and the 
demonstration and feasibility of pollution prevention process changes. 
The segments being considered by EPA are:
    (a) Production of pulp and paper at papergrade sulfite mills using 
an acidic cooking liquor of calcium, magnesium, or sodium sulfite.
    (b) Production of pulp and paper at papergrade sulfite mills using 
an acidic cooking liquor of ammonium sulfite.
    (c) Production of pulp and paper at specialty grade sulfite mills. 
Specialty grade sulfite mills are those papergrade mills producing 
specialty grade pulp characterized by a high percentage of alpha 
cellulose and high brightness. Typical end uses of such pulp include 
plastic molding compounds, saturating and laminating products, and 
photographic papers.
    The technology basis for papergrade sulfite products made by the 
first segment (calcium-, magnesium-, and sodium-based processes) is 
likely to be totally chlorine-free bleaching, as proposed.
    For the second segment (ammonium-based), EPA has received comments 
and data regarding the applicability of TCF bleaching. The Agency's 
preliminary conclusion regarding this information is that TCF bleaching 
is not demonstrated and may not be feasible for the full range of 
products produced by ammonium-based sulfite mills in the United States. 
This conclusion is based primarily on the greater difficulty in 
bleaching ammonium-based sulfite pulps (especially those pulps derived 
from softwood) without the use of chlorine-containing compounds 
compared to other sulfite pulps, and the inability to maintain product 
specifications for certain products within this segment using TCF 
bleaching. TCF bleaching has not been demonstrated for products with a 
high percentage of ammonium-based sulfite pulp that also require low 
dirt count and high strength. Laboratory scale data have been submitted 
by a firm producing such products indicating that such products can be 
produced with elemental chlorine-free (ECF) technologies.
    EPA expects to promulgate bleach plant effluent limitations for 
dioxin, furan, and chlorinated phenolic compounds for the ammonium-
based segment. EPA anticipates that it will reserve promulgation of 
bleach plant chloroform limitations and end-of-pipe AOX limitations for 
this segment until such time that sufficient performance data are 
available for a mill with the product quality concerns discussed above. 
EPA expects to have data that could serve as the basis of chloroform 
and AOX limits for this segment no later than mid-1997.

[[Page 36845]]

    For the third possible segment (mills that produce specialty grade 
pulps), EPA has received comments and data that indicate key pulp and 
product characteristics have not been achieved using TCF bleaching 
technologies. Data from a firm producing specialty grade pulps indicate 
required product characteristics may be achievable using ECF bleaching 
technologies. These results are from limited laboratory scale trials.
    The Agency is continuing to work with specialty sulfite pulp 
manufacturers as their research efforts progress and therefore does not 
expect to promulgate final effluent limitations guidelines and 
standards for this segment of the papergrade sulfite subcategory in 
1996. EPA anticipates, however, that alternative bleaching processes 
developed as a result of these research efforts should contribute to 
substantial reductions from current operating practices in the 
generation and release of pollutants including, for example, air 
emissions of chloroform and discharge of chlorinated organic compounds 
in wastewaters. EPA encourages mills in this segment to undertake and 
expeditiously complete developmental work that will facilitate 
installation of alternative process technologies that achieve these 
pollution prevention goals at the earliest possible date.
2. Technology Options for BAT
    For papergrade sulfite mills using an acidic cooking liquor of 
calcium, magnesium, or sodium sulfite, the TCF technology option being 
considered as the technology basis for limitations is oxygen and 
peroxide enhanced extraction, followed by peroxide bleaching. Although 
still TCF, the technology sequence is a change from proposal, when TCF 
was an oxygen stage with peroxide addition, followed by a peroxide 
bleaching stage. This change to the TCF bleaching sequence reflects the 
more common approach to TCF bleaching within the proposed papergrade 
sulfite subcategory, and also reflects the technology basis of the mill 
from which performance data have been collected.
    For papergrade sulfite mills using an acidic cooking liquor of 
ammonium sulfite, the technology option being considered as the 
technology basis for limitations is complete (100 percent) substitution 
of chlorine dioxide for chlorine, peroxide enhanced extraction, and 
elimination of hypochlorite. This sequence reflects the results of 
laboratory trials showing the ability to produce the full range of 
products manufactured by mills in the ammonium segment, with acceptable 
final product characteristics.
    For production of pulp and paper at specialty grade sulfite mills, 
technology development work is still ongoing. The most likely 
technology basis for this segment is oxygen delignification, complete 
(100 percent) substitution, and oxygen and peroxide enhanced 
extraction.
3. Costs
    EPA revised its cost estimates for mills in the subcategory by 
using the revised bleaching sequences outlined above. EPA also has 
updated equipment cost curves and unit operating costs. The detailed 
basis of these revised cost estimates are provided in the record (DCNs 
13920, 13947). The preliminary estimates of capital costs for mills in 
the first two segments of the papergrade sulfite subcategory are $57.9 
million. The preliminary annual operating and maintenance costs are 
estimated to be $1.3 million per year. Total annualized costs are 
estimated to be $6.6 million per year. These estimates do not include 
costs for specialty grade sulfite mills.

4. Effluent Reduction Benefits

    EPA has updated the calculation of effluent reduction benefits for 
each papergrade sulfite mill, adjusting the baseline to mid-1995. EPA 
used methodology similar to that used for the proposed bleached 
papergrade kraft and soda subcategory.
5. Revised Effluent Limitations for BAT and PSES
    Table 7 presents the preliminary results of revising BAT effluent 
limitations for the proposed papergrade sulfite subcategory, based on 
TCF bleaching for the calcium-, magnesium-, and sodium-based segment 
and ECF bleaching for the ammonium sulfite segment. For a discussion of 
the pollutants EPA is considering addressing in its final rules for 
this proposed subcategory, see Section V.A.5 of today's notice.

  Table 7.-- Papergrade Sulfite Subcategory Bleach Plant Daily Maximum  
                               Limitations                              
------------------------------------------------------------------------
                                                 Calcium,               
                                                magnesium,    Ammonium- 
                                               and sodium-      based   
                                   Proposed   based sulfite    sulfite  
                                               pulping TCF   pulping ECF
                                                bleaching     bleaching 
------------------------------------------------------------------------
TCDD (ng/kkg)..................  none.......  none.........  ND         
TCDF (ng/kkg)..................  none.......  none.........  ND         
Chlorinated Phenolics (mg/kkg).  none.......  none.........  ND         
Chloroform (g/kkg).............  none.......  none.........  TBD a      
AOX (kg/kkg)...................  0.1 b......  ND b.........  TBDa       
------------------------------------------------------------------------
a To Be Developed (TBD).                                                
b End-of-pipe limitation.                                               

    Table 8 presents the proposed effluent limitations for COD. 
However, the supplemented database for the proposed papergrade sulfite 
subcategory has very limited data to characterize COD loadings either 
for on-site sources (including pulping and bleaching and other sources) 
or the performance of the best spill prevention (BMPs), process 
changes, and end-of-pipe biological treatment systems. As noted 
previously, EPA will consider additional data and comments received in 
response to this notice in developing final COD limits for TCF 
(calcium-, magnesium-, and sodium-based sulfite) and ECF (ammonium-
based sulfite) mills in this subcategory. However, EPA also is 
considering deferring developing COD limits until BAT COD limits are 
developed for other subcategories in a later rulemaking.

        Table 8.--Papergrade Sulfite Subcategory End-of-Pipe COD        
------------------------------------------------------------------------
                                                             Segment Bb 
                                      As       Segment Aa     (kg/kkg)  
                                   proposed  (kg/kkg)  TCF       ECF    
                                               Bleaching      Bleaching 
------------------------------------------------------------------------
Long-Term Average...............      63.7   TBD            TBD         
Monthly Average Limitation......      71.2   TBD            TBD         
Daily Maximum Limitation........     144     TBD            TBD         
------------------------------------------------------------------------
a Segment A:Calcium-, magnesium-, and sodium-based sulfite pulping.     

[[Page 36846]]

                                                                        
b Segment B:Ammonium-based sulfite pulping.                             


6. Conventional Pollutant Limitations
    As is the case for the proposed papergrade kraft and soda 
subcategory, the Agency is considering promulgating more stringent 
effluent limitations for conventional pollutants for the proposed 
papergrade sulfite subcategory only if such limits pass the BCT cost 
test. EPA solicits comment on this approach. The revised conventional 
pollutant limitations would apply to the calcium-, magnesium-, or 
sodium-sulfite segment and to the ammonium sulfite segment, but not to 
the specialty grade segment. Characteristics of wastewaters from 
specialty grade sulfite mills are significantly different than 
wastewaters from papergrade sulfite mills in the other two segments. 
The Agency does not as yet have sufficient data to establish 
performance levels for conventional pollutants for the specialty grade 
segment.
    EPA has updated and revised its analysis of performance levels in 
response to comments and additional data. These changes are detailed in 
the record (see DCN 13954). Table 9 summarizes the adjustments to the 
proposed BCT options and the revised BCT option.

Table 9.--Papergrade Sulfite Subcategory a Long-Term Average Performance
             of Proposed BCT Options and Revised BCT Option             
------------------------------------------------------------------------
                                                          BOD5     TSS  
                                                         Long-    Long- 
                                                          Term     Term 
                                                        Average  Average
                                                          (kg/     (kg/ 
                                                         OMMT)    OMMT) 
------------------------------------------------------------------------
Proposal Option 1.....................................     4.97     5.46
Proposal Option 2.....................................     3.60     4.74
Revised Option........................................     7.06    8.39 
------------------------------------------------------------------------
a Applicable to Calcium-, Magnesium-, and Sodium-based Sulfite Pulping  
  Segment, and to Ammonium-based Sulfite Pulping Segment.               

7. Technology Options and Revised Effluent Limitations for NSPS
    The technology basis of NSPS for the segments of the proposed 
papergrade sulfite subcategory is likely to be the same as for the BAT 
limitations. For calcium-, magnesium-, and sodium-based sulfite mills, 
TCF-based technology is the likely basis for NSPS. TCF bleaching has 
not been demonstrated as applicable to the full range of products made 
by ammonium-based sulfite mills; therefore, ECF-based technology is 
likely to be the basis of NSPS for mills in this segment. EPA plans to 
reserve NSPS for specialty grade sulfite mills.
    EPA proposed NSPS for conventional pollutants based on best 
demonstrated end-of-pipe secondary wastewater treatment. The treatment 
system with the lowest long-term average BOD5 discharge was used 
to characterize the best demonstrated performance. EPA does not 
anticipate changing this methodology for developing NSPS for the 
proposed papergrade sulfite subcategory. EPA continues to maintain that 
any newly constructed mill will be able to achieve the same discharge 
load as the best existing mill. Because of the changes since proposal 
in the data sets characterizing typical treated effluent loads for 
conventional pollutants for the proposed papergrade sulfite 
subcategory, the best existing performance has changed, as summarized 
in Table 10. The end-of-pipe performance of the single best mill 
adequately represents the expected variability in raw materials, 
processes, and products for mills in this subcategory.

  Table 10.--Papergrade Sulfite NSPS Conventional Pollutants (Long Term 
                                Averages)                               
------------------------------------------------------------------------
                                                          BOD5          
                                                          (kg/   TSS (kg/
                                                         OMMT)    OMMT) 
------------------------------------------------------------------------
Proposed NSPS.........................................    2.69*    2.99*
Revised NSPS..........................................     5.61     8.98
------------------------------------------------------------------------
* Note that this is the average load of the best mill identified in the 
  Technical Development Document for the proposed rule.                 

8. Economic Impacts
    a. Costs and Impacts. The economic analysis for papergrade sulfite 
mills was revised and updated in a manner similar to that described in 
Section V.A.12 of today's notice for the proposed bleached papergrade 
kraft and soda subcategory.
    Total annualized BAT and PSES costs for the papergrade sulfite 
subcategory are estimated to be approximately $6.6 million (post-tax). 
No mills would be expected to close as a result of these costs, with no 
related job losses.
    b. Cost-Effectiveness. The following results are for the first two 
segments of the papergrade sulfite subcategory. Cost-effectiveness 
ratios are not yet available for each of these segments, reported 
separately.
    For direct dischargers, the cost-effectiveness ratio using pre-tax-
costs, is $10 per pound-equivalent removed. For indirect dischargers, 
the cost-effectiveness ratio is $284 per pound-equivalent removed.

VI. Environmental Assessment

    At proposal, EPA estimated 2,3,7,8 TCDD (``dioxin'') and 2,3,7,8 
TCDF (``furan'') concentrations in fish tissue and then used those 
concentrations to estimate individual cancer risks and non-cancer 
hazards from consuming contaminated fish. EPA calculated estimates for 
recreational and subsistence anglers using two water quality models. 
One is a simple dilution model that assumes complete mixing and 
bioavailability with contaminant accumulation in fish estimated by a 
bioconcentration factor (BCF). The other model is EPA's Dioxin 
Reassessment Evaluation Model (DRE), which estimates fish tissue 
concentrations by equilibrium partitioning between the fish tissue and 
contaminants adsorbed to the organic fraction of sediments suspended in 
the water column. EPA received comments asserting that EPA improperly 
employed the simple dilution model as a basis for predicting the risk 
from dioxin and furan discharges. The comments further suggest that EPA 
should only use the ``more realistic'' DRE model and not the simple 
dilution model to estimate human exposure.
    After evaluating these comments and new data related to the water 
quality modeling for hydrophobic compounds, such as dioxin and furan, 
EPA is considering changing its methodology for estimating dioxin and 
furan concentrations in fish and for estimating individual cancer risks 
and non-cancer hazards for the final rule. EPA is considering not using 
the simple dilution model, which assumes complete mixing and 
bioavailability with contaminant accumulation in fish estimated by a 
bioconcentration factor, but instead using the DRE model. If EPA uses 
the DRE model, however, EPA would replace the Biota to Suspended Solids 
Accumulation Factor (BSSAF factor) of 0.09 (based on Lake Ontario data 
which is primarily historical sources) with a BSSAF factor of 0.2, a 
value considered more appropriate for ecosystems with ongoing impacts 
(see ``Estimating Exposures to Dioxin-Like compounds'' Volume III: 
Site-Specific Assessment Procedures; EPA 1994; DCN 13955).
    EPA is still conducting its reassessment of dioxin and its impacts 
on human health and the environment. Results of that reassessment 
available prior to completing the Cluster Rules will be considered as 
appropriate. EPA also has made available the 1995 database update of 
the National Listing of Fish and Wildlife Consumption Advisories. See 
the record at DCN

[[Page 36847]]

14016, Section 20.3. This listing is PC-based and available to the 
public free of charge from the Internet through the following URL: 
HTTP://www.epa.gov/OW/OST/Tools.

VII. Best Management Practices

    In the proposed regulations EPA included provisions for leak and 
spill prevention, containment, and control through best management 
practices (BMPs). EPA has received comments that generally support the 
use of BMPs. However, some commenters challenged the details of these 
provisions. EPA continues to believe that leak and spill prevention, 
containment, and control through BMPs yield not only increased 
environmental benefits but also improved efficiency of operations at 
pulp and paper mills. The Agency also intends that BMPs apply in the 
final rule both for direct and indirect discharging mills.
    The Agency has assessed preliminarily the comments and data 
received on BMPs and has held detailed discussions with stakeholders 
regarding options for BMPs and associated costs. EPA received a 
substantial amount of additional information and data, including costs, 
through a survey conducted by AF&PA and NCASI. Based on the information 
and data received from mills that have implemented spill prevention and 
control programs, EPA has reformulated the scope of BMPs to focus on 
spent pulping liquor (i.e., black liquor and red liquor) spill control. 
The Agency is also restructuring BMP program requirements to allow for 
further flexibility in how BMPs are implemented to achieve meaningful 
prevention and control of leaks and spills of spent pulping liquors. 
The Agency has prepared and included in the record (DCN 13894) a 
document that incorporates EPA's preliminary revisions to its proposed 
BMP program.
    In response to comments, this document also describes a management 
program being considered by EPA for monitoring the implementation of 
BMPs. The purposes of this requirement are: (1) To provide a framework 
for monitoring the performance and effectiveness of BMPs on a 
continuing basis; and (2) to establish an early warning system to 
detect trends in spent pulping liquor losses that might otherwise not 
be obvious from other sources. The program entails establishing upper 
operating control limits on a measure of organic loading at the 
influent to wastewater treatment or at another key location or 
locations in the mill sewer system, and responding to exceedances of 
those control limits with investigative and corrective actions, as 
appropriate. EPA does not intend that exceedances of the upper control 
limits will constitute violations of NPDES permits or pretreatment 
control mechanisms. Failure of the owner or operator to conduct the 
required monitoring or failure to conduct investigative or corrective 
actions when such limits are exceeded would constitute violations.
    EPA believes, consistent with a comment received, that COD is among 
the best, if not the best, pulp mill wastewater characteristics to 
monitor to meet the requirements of this provision of the BMP 
regulation. The test method for COD is highly reproducible and can be 
run in a short period of time, unlike BOD5. It also has the 
advantage of being responsive to losses of turpentine and soap, unlike 
conductivity which is not responsive to these materials. Accordingly, 
the revised BMP program incorporates COD as the control parameter to 
measure performance of pulping liquor spill controls. The Agency seeks 
comments on the revised approach to BMPs and related details, including 
costs. EPA also seeks comment on the management program described 
above, including its potential effectiveness and any implementation 
issues it might present, especially from a permit writer's perspective.

VIII. Pretreatment Standards

    In the proposal, EPA discussed three options for pretreatment 
standards for existing sources (PSES) for the 13 indirect discharging 
facilities in four proposed subcategories, each of which contribute the 
majority of flow or pollutant loadings to a publicly owned treatment 
works (POTW). The option selected for proposal would have set PSES for 
these indirect dischargers for the same pollutants controlled by BAT 
for direct dischargers; the proposed standards would have applied at 
the point of discharge from the bleach plant and at the point of 
discharge to the POTW, depending upon the pollutant proposed to be 
regulated. EPA also solicited comment on whether pretreatment standards 
for BOD5 and TSS were warranted to ensure that pass-through of 
these and other pollutants (e.g., AOX) did not occur.
    For the proposed bleached papergrade kraft and soda subcategory and 
the proposed papergrade sulfite subcategory, EPA's record shows that 
both direct-discharging mills in those proposed subcategories and POTWs 
accepting wastewaters from pulp and paper mills in those proposed 
subcategories generally operate secondary biological treatment systems. 
Data now available to EPA suitable for characterizing treatment system 
performance at these POTWs still are quite limited. In general, the 
data provided by indirect-discharging facilities, POTWs, and other 
interested parties lack paired influent and effluent AOX, COD, and 
color data points, accompanying information concerning operations (at 
either the treatment system or related to pulping and bleaching process 
areas of the mills), analytical methods, and quality control/assurance 
(QA/QC) associated with sample collection, handling, and laboratory 
analysis. In addition, some commenters provided summary information 
unaccompanied by individual analytical data points, particularly for 
POTW influent. As a result, EPA has been unable to develop a complete 
and rigorous database for conducting a pass-through analysis. 
Nevertheless, EPA has used the limited information available to the 
extent possible in comparing pollutant reductions attained by direct-
discharging mill treatment systems and by POTWs accepting similar 
wastewaters in evaluating the potential for pass-through to take place. 
Based on the limited data available for the proposed bleached 
papergrade kraft and soda and the proposed papergrade sulfite 
subcategories, it appears that secondary biological treatment systems 
at POTWs and direct-discharging mills generally achieve comparable 
reductions of BOD5, TSS, AOX, COD, and color. (See the record at 
DCN 13956.) Thus, EPA has concluded preliminarily that the data 
reviewed for this analysis do not indicate pass-through of these 
pollutants is likely to occur at these POTWs. EPA solicits comments on 
this finding.
    Accordingly, EPA anticipates that it will not promulgate national 
pretreatment standards for new or existing sources for BOD5, TSS, 
AOX, COD, or color for the proposed bleached papergrade kraft and soda 
subcategory or the proposed papergrade sulfite subcategory. Any new 
data received on these pollutants, particularly for POTWs that did not 
submit data usable for this analysis, will be considered in preparing 
the final rules and will be placed in the record. Notwithstanding EPA's 
preliminary decision not to set PSES or PSNS for those pollutants for 
these subcategories, other regulatory authorities may determine, based 
on a site-specific review of treatment system performance, that pass-
through of these or other pollutants does indeed occur and that locally 
imposed limits are appropriate.
    Concerning the pollutants discharged from the bleach plant, EPA 
continues to

[[Page 36848]]

believe that sludge contamination occurs and therefore is likely to 
promulgate PSES and PSNS for the same pollutants controlled at the 
bleach plant by BAT limitations, as included in the proposal and as now 
being considered in this notice, for direct-discharging facilities. See 
Sections V.A and V.B, supra, for discussion of pollutants selected for 
BAT regulation at the discharge from the bleach plant.

IX. Implementation Issues

A. Permit Limits for Multiple Subcategory Mills

    The Agency has structured the revised effluent limitations 
guidelines and standards to be used in a building block approach. This 
means that the applicable NPDES permit limitations for mills with 
production in more than one subcategory will be the sum of the mass 
loadings based on the appropriate production in each subcategory and 
the respective subcategory effluent limitations guidelines or 
standards. In some cases, such any BCT limitations for conventional 
pollutants, this may entail the use of two distinct subcategorization 
schemes, revised and current. Where the Agency has revised effluent 
limitations guidelines or standards, the appropriate production 
encompassed in the revised subcategories will be utilized for the 
calculation of mass limitations, with all remaining production 
categorized and mass loadings calculated according to the current 
subcategory scheme.

B. New Sources

    In the proposed rule, EPA included definitions of types of 
facilities that would be considered new sources. EPA received comments 
that asserted that EPA had no basis for changing the definition of new 
sources as provided in National Pollutant Discharge Elimination System 
(NPDES) permit program regulations (found at 40 CFR 122.2 and 122.29). 
EPA is considering clarifying its definitions such that only new 
``greenfield'' mills and new capacity increases at existing mills would 
be considered new sources. Any existing mills that renovate existing 
fiber lines at existing production levels for purposes of complying 
with either BAT or PSES effluent limitations or standards or any 
existing mills that voluntarily accept more stringent BAT limitations 
as part of the incentives program would not be considered new sources.

C. Monitoring

    EPA proposed specific minimum monitoring requirements in the 
regulation (at Sec. 430.02) with monitoring frequencies for pollutant 
parameters included in both bleach plant effluent limitations and end-
of-pipe effluent limitations. EPA is considering retaining these 
minimum monitoring requirements as proposed at least for the two 
proposed subcategories covered by this notice, and possibly also for 
remaining bleaching subcategories to be covered in a later rulemaking. 
However, EPA acknowledges that this approach would be a change from 
past effluent guidelines practice where EPA issued only guidance with 
respect to monitoring. EPA therefore welcomes comment--particularly 
from permitting authorities--regarding the appropriateness of 
promulgating specific minimum monitoring requirements. EPA also 
acknowledges that specific minimum monitoring requirements may be at 
odds with the Agency's recent initiative to tailor monitoring 
requirements to particular circumstances, notably compliance records.
    EPA has received a suggestion from the industry that if mills 
certify that elemental chlorine is not being used in bleaching 
operations (i.e., ECF--complete substitution with chlorine dioxide and 
elimination of hypochlorite), monitoring should not be required for 
dioxin, furan, or any other chlorinated organic pollutant parameters 
proposed to be regulated (i.e., AOX, chloroform, chlorinated phenolic 
compounds, etc.). EPA does not agree with the industry's assertion that 
substitution of chemicals alone (changing to and ECF process), without 
regard for operational controls, is sufficient to warrant such an 
approach. There are data available for ECF operations indicating, for 
example, that detectable concentrations of dioxin still can be 
generated in bleach plant effluents. Contrary to the industry's 
assertion, this finding reflects the need for careful control of 
chemical (e.g., chlorine dioxide) application rates. Further, 
chloroform concentrations in wastewater, and also air emissions, can be 
expected to exhibit considerable variability reflecting pulp washing 
and other operational practices. Therefore, without meaningful 
monitoring data to reflect a range of operational practices, as well as 
raw materials and final products, there is no assurance that changes in 
process technologies that are installed are being properly operated or 
that bleach plant limits or end-of-pipe limits are being achieved 
consistently.

D. BMPs as NPDES Permit Special Conditions

    EPA proposed that specific BMP requirements be fully implemented 
within thirty months from the effective date of the final rules, 
separate from the normal NPDES reissuance process. This structure would 
be retained for indirect dischargers because the BMPs would be 
promulgated as part of PSES. For direct dischargers, however, EPA is 
now considering requiring implementation of BMPs as special NPDES 
permit conditions and to require implementation of the BMPs within 
thirty months from the effective date of the final rule or the date the 
mill's next NPDES permit is issued, whichever is later. However, EPA 
expects that the compliance date for implementation shall not extend 
beyond five years from the effective date of the final rule, because 
EPA expects NPDES permit for those mills to be reissued on a timely 
basis.

E. Relationship Between the Cluster Rules and Project XL

    As described in the May 22, 1995 Federal Register notice (60 FR 
27282), EPA is participating in the development of regulatory 
reinvention excellence and leadership (Project XL) pilot projects. Such 
projects would involve the exercise of regulatory flexibility by EPA in 
exchange for a commitment on the part of the regulated entity to 
achieve better environmental results than would have been attained 
through full compliance with all applicable regulations. One bleached 
papergrade kraft mill is participating in Project XL. Many of the 
incentives listed in Section X of this notice provide regulatory 
flexibility in exchange for superior environmental benefits. EPA 
solicits comments on how, if at all, project XL should be reflected in 
this rulemaking.

F. Summary of Changes to Methods for Analysis of Pulp and Paper 
Industry Wastewaters

    The pulp and paper industry and other commenters have provided 
suggestions for improvement of methods for analysis of pulp and paper 
industry wastewaters. Where these suggestions are expected to have a 
positive effect on the reliability of analytical data produced, EPA 
will incorporate the suggestions into the final versions of methods 
incorporated by reference into the final rule to be promulgated at 40 
CFR part 430. Methods for which changes are anticipated and a summary 
of these changes are given below. This summary is not intended to be 
all-inclusive, but to be indicative of the

[[Page 36849]]

type of changes anticipated. Detailed revisions to these methods will 
be added to the record at a later date.
1. Method 1624, Volatiles by Purge-and-Trap and Isotope Dilution GC/MS
    Suggested changes focused mostly on clarification of the language 
in Method 1624 rather than on substantive modifications of the method. 
These clarifications will be made when Method 1624 is revised, updated, 
and re-promulgated at 40 CFR Part 136. This update is expected in late 
1996 or in 1997. No changes will be made to Method 1624 for 
promulgation of the pulp and paper industry Cluster Rules.
2. Method 1650, AOX by Adsorption and Coulometric Titration
    EPA expects that changes will be made in Method 1650 as part of 
this rulemaking to improve the ease of use and the reliability of this 
method. Among the possible changes, EPA expects that the breakthrough 
specification will be adjusted based on data provided by the industry; 
that a 25-mL adsorption volume will be allowed, provided the 
sensitivity requirements in the method are met; that greater 
flexibility will be allowed in the apparatus cited in the method; that 
2-mm columns only will be allowed; and that a minimum integration time 
of 10 minutes will be added to assure that all AOX is measured.
3. Method 1653, Chlorophenolics by In-Situ Derivatization and Isotope 
Dilution GC/MS
    EPA expects that changes will be made to Method 1653 as part of 
this rulemaking to improve the reliability of the method and to lower 
costs of measurements. Among the possible changes, EPA anticipates 
lowering the spiking levels of the labeled compounds to reduce 
interferences with trace levels of the analytes of interest and to 
lower the cost of labeled compounds; allowing the use of solvents more 
appropriate to the particular analyte being dissolved; the addition of 
the labeled compounds to the sample prior to pH adjustment; and a 
reduction in method flexibility in certain critical areas.
4. Method NCASI Technical Bulletin No. 253, Color
    Changes anticipated as part of this rulemaking are: Removal of 
extraneous tables; revision of text of interferences; use of a 
prefilter and/or centrifugation to reduce turbidity; and allowance of 
use of a buffer solution and prefiltration so long as these changes do 
not result in lower color values.

G. Regulatory Flexibility Analysis

    At the time of proposal, EPA examined the potential economic impact 
of the proposed Cluster Rules on small entities under the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq., Pub. L. 96-354). See 58 FR 
66077, 66154, (December 17, 1993). As part of this analysis, EPA 
estimated the economic impact of the proposed integrated regulatory 
alternative on small mills and small companies involved in pulp, paper 
and paperboard manufacturing. See 58 FR 66154. The analysis also 
presented the Agency's consideration of alternatives that might 
minimize the impacts of the proposed Cluster Rules on small entities. 
See 58 FR 66165. EPA did not analyze the alternative represented by 
Option A at proposal because it lacked the data and information 
necessary to perform that analysis. Based on the information and data 
EPA has received since proposal, EPA believes that Option A represents 
a significant alternative to the proposed BAT option. Because that 
alternative, if adopted, would afford more flexibility to small 
businesses than the proposed option and because the original analysis 
addressed what EPA regards as the most stringent set of regulatory 
alternatives, EPA believes that the original analysis continues to 
provide an adequate basis by which to evaluate the impact of the 
proposed Cluster Rules on small entities. Moreover, mills in the 
proposed bleached papergrade kraft and soda and papergrade sulfite 
subcategories typically are not small businesses, whereas the proposed 
Cluster Rules included other subcategories in which small businesses 
are more likely to be operating. As described earlier in this notice, 
these other subcategories will not be included in this initial phase of 
final rulemaking but in a later phase of rulemaking. For this reason, 
EPA believes that no further regulatory flexibility analysis is 
necessary at this time. However, EPA will perform a final regulatory 
flexibility analysis in compliance with all applicable laws at the time 
it promulgates the Cluster Rules.

X. Incentives for Further Environmental Improvements

    As noted earlier in this notice, EPA's vision of long term 
environmental goals for the pulp and paper industry includes continuing 
research and progress toward environmental improvement. The Agency 
believes that individual mills could be encouraged to explore and 
install technologies that could achieve further pollutant reductions 
through a voluntary incentives program designed to complement the 
baseline BAT. This industry's participation in the 33/50 program and 
its progress toward reducing toxic discharges in advance of the 
proposed BAT revisions indicate that such an approach may be widely 
accepted and utilized by individual mills.
    Further, EPA recognizes that technologies exist, and are currently 
employed by some mills, that have the ability to surpass the 
environmental protection that would be provided by compliance with 
limits and standards based on the final rules. These technologies 
include extended delignification (e.g., extended cooking and/or oxygen 
delignification) in conjunction with complete substitution (if Option A 
is selected), and TCF bleaching technologies. Some mills also are 
investigating and developing advanced technologies that achieve major 
reductions in water use and process wastewater flow through treatment 
and recycle of pulping and evaporator condensates and bleach plant 
filtrates to recovery systems.
    EPA has received suggestions for an incentives program from a 
number of stakeholders. In addition to the suggestions EPA has 
incorporated into its preliminary incentives program, EPA also received 
ideas for other incentives; these ideas are summarized later in this 
notice. From these and other stakeholder suggestions, EPA has developed 
a preliminary program, presented below, that is intended to provide 
incentives for further long term environmental improvements. EPA is 
considering several types of incentives to encourage further 
environmental improvements by mills that have yet to decide on an 
approach to comply with BAT effluent limitations. Because mill-specific 
factors, including product specifications and existing equipment, may 
affect the technical approach taken or the environmental goal 
attainable by an individual mill, EPA is considering several tiers of 
performance-based incentives. The appropriate limits and standards for 
each of tier would be codified as an alternative BAT and, as 
appropriate, NSPS for any mill choosing to participate in the 
incentives program at that tier. Under this approach, greater 
incentives would be available for greater reductions in pollutant 
discharge.
    EPA recognizes that there are mills in the proposed bleached 
papergrade kraft and soda subcategory that have already installed, have 
committed to install or may yet decide to install, advanced 
technologies that are achieving or have the potential to achieve 
effluent limitations more stringent than those

[[Page 36850]]

likely to be adopted in the final rules (particularly if Option A is 
selected). These mills would qualify for the incentives program, and 
the incentives would actually serve as rewards for actions already 
taken.
    A key tenet of this program is that mills would voluntarily chose 
an incentives-related BAT/NSPS as the basis for their technology-based 
NPDES permit limits (e.g., inclusion in NPDES permits of AOX effluent 
limitations more stringent than those based on the baseline BAT as well 
as condensate and bleach plant wastewater flow reduction limitations) 
in order to qualify for these incentives. Mills would not be required 
to enter this program. A mill choosing not to accept incentives-related 
BAT limitations or NSPS would be subject to the baseline BAT 
limitations or NSPS would be subject to the baseline BAT limatations on 
NSPS of the type discussed in today's notice in Section V.
    Any mill could voluntarily enter at any tier appropriate to its 
individual circumstances. Further, mills that enter either at Tier I or 
Tier II could decide, after making such a commitment in permits but 
before termination of the appropriate compliance period (i.e., not 
later than five years--Tier I, or not later than ten years--Tier II), 
to commit to the requirements of a more stringent tier (i.e., Tier II 
or Tier III). The limitations and standards corresponding to those 
tiers would then be BAT for that mill. Threshold requirements at Tier I 
being considered for mills to qualify would include unbleached pulp 
characteristics typical of extended delignification technologies (e.g., 
oxygen delignification) and recycle of pulp mill filtrates to recovery 
systems (for purposes of this discussion using Option A as the BAT 
baseline). For NSPS, the entry tier would probably be Tier II (as 
tentatively defined in this Notice), assuming that the baseline NSPS is 
codified as discussed in Section V.A.11 above.
    Mills that operate a single fiber line and that achieve performance 
reflective of advanced technology on that line will be considered 
eligible as a whole mill for the incentives described below (except for 
operations outside of the pulp, paper and paperboard industrial 
category and the proposed bleached papergrade kraft and soda 
subcategory). At mills with more than one fiber line, only those fiber 
lines that achieve performance reflective of advanced technology 
performance standards will be eligible for the incentives described 
below.
    A preliminary list of possible incentives along with the Agency's 
preliminary structure of these advanced technology program tiers 
follows below. This structure consists of three tiers that would apply 
if Option A is selected as the baseline BAT in the final rule.

A. Advanced Technology Tiers

1. Definition of Incentives-Related BAT Limitations or NSPS by Tier
    EPA is considering including in the final regulation three tiers of 
BAT limitations and two tiers of NSPS applicable to the proposed 
bleached papergrade kraft and soda subcategory, each of which would be 
defined in the Code of Federal Regulations. In addition to the possible 
limitations and standards described below, each tier also would include 
as limitations and standards for other parameters the bleach plant 
limitations EPA is considering promulgating as part of the baseline 
BAT/NSPS.
    a. Tier I BAT Limitations. To qualify for this tier, a mill would 
need to operate its advanced technology (AT) fiber line(s) to achieve a 
final effluent AOX long term average (LTA) of 0.30 kg/kkg. AT fiber 
lines must also achieve reduced lignin content in unbleached pulps as 
measured by a kappa number of 20 for softwoods and 13 for hardwoods. 
Finally, AT fiber lines must recycle to recovery systems all filtrates 
up to the point at which the unbleached pulp kappa numbers are measured 
(e.g., brownstock into bleaching).
    b. Tier II BAT Limitations and NSPS. To qualify for this tier, a 
mill would need to operate its AT fiber line(s) to achieve a final 
effluent AOX LTA of less than 0.10 kg/kkg, and total pulping area 
condensate, evaporator condensate, and bleach plant wastewater flow of 
10 m3/kkg or less.
    c. Tier III BAT Limitations and NSPS. To qualify for this tier, a 
mill would need to operate its AT fiber line(s) to achieve a final 
effluent AOX LTA of 0.05 kg/kkg, and total pulping area condensate, 
evaporator condensate, and bleach plant wastewater flow of 5 m3/kkg or 
less.
    For each tier described above, EPA would also promulgate 
appropriate limitations (maximum monthly average and maximum for any 
one day) that account for variability around the long term average 
(LTA) limits presented above. See the record for discussion of limits 
and standards defining these tiers (DCN 13957).
2. Basis for Incentives-Related BAT Limitations and NSPS
    For Tier I (if complete substitution is chosen as the baseline 
BAT), the BAT model technology would be that represented by BAT Option 
B. EPA is not selecting a model technology for Tiers II and III (under 
the present structure) because these Tiers are intended to reflect 
evolution of advanced technologies that cannot be specified today. 
However, EPA expects that those technologies would move mills toward 
minimum impacts and closed loop operations. EPA has chosen to use AOX 
as a performance standard for each of the three incentives-related BAT 
tiers and the two NSPS tiers because AOX is a measure of progress in 
reducing the total chlorinated organic matter in wastewaters resulting 
from the bleaching of pulps. In addition, the use of AOX rather than 
other measures of organic matter (e.g., BOD) will further encourage a 
pollution prevention approach instead of end-of-pipe treatment 
technologies. EPA seeks comment on including COD as a performance 
criterion in addition to AOX, and seeks comment on and data supporting 
the performance-based COD value that would be appropriate for each of 
the tiers in terms of mass-loading or percent reduction beyond BAT/NSPS 
levels.
    In addition to the AOX criterion, EPA is considering establishing 
BAT limitations for Tier I that include kappa numbers measured prior to 
bleaching and a narrative limitation calling for recycling of the 
filtrates generated prior to the point at which that kappa is achieved. 
By meeting the kappa number and recycle limitations, Tier I mills would 
achieve substantial reductions in precursors for chlorinated organic 
pollutants found in lignin (measured as kappa number values) beyond 
reductions achieved by mills with conventional pulping processes. 
Further, Tier I mills would be bleaching pulps with less lignin and 
would realize significant reductions in the amount of unrecoverable 
bleaching chemicals required to achieve their target brightness. By 
using less bleaching chemical, Tier I mills would further increase the 
margin of safety by reducing the formation and discharge of chlorinated 
organic pollutants generated by bleaching pulps with chlorine-
containing compounds, including chlorine dioxide. By recycling the 
bleaching filtrates, Tier I mills also would be implementing an 
important building block for long-term flow reduction goals.
    By defining Tier I with parameter values (AOX, kappa numbers) and 
recycle requirements as presented above, EPA intends to provide maximum 
encouragement to as many mills as possible to achieve the performance 
of at least the initial threshold of the advanced technology

[[Page 36851]]

program. Adopting threshold performance criteria that are too stringent 
could discourage mills from making additional capital investments 
beyond those necessary to achieve the baseline BAT. This could 
undermine one goal of the incentives program, which is to achieve the 
greatest environmental results possible consistent with mills' capital 
investment cycles. Conversely, setting threshold criteria at levels 
that could be met by some mills that only comply with the baseline BAT 
limitations and do not employ advanced technologies could serve as a 
disincentive to invest in advanced technologies that achieve dramatic 
reductions in pollutant loadings and flow. The kappa numbers defined 
above for Tier I, while at the upper end of the range of values 
achieved by these technologies, nonetheless appear to separate mills 
that employ them from mills that would use conventional pulping 
technologies and achieve the BAT effluent limitations now being 
considered by EPA. EPA seeks comment on this finding.
    EPA is considering setting the incentives-related BAT limitations 
and NSPS for Tier II and Tier III based on a more stringent philosophy 
than for Tier I. EPA believes that Tiers II and III should reflect 
movement toward the long-term goal of minimizing impacts of mills in 
all environmental media through partially or fully closed loop 
processes. For Tier II, EPA is considering an AOX limit based on a 
long-term average (0.10 kg/kkg) that is currently being achieved by 
some of the best mills in the industry. For Tier III, EPA is 
considering an AOX limit based on a long-term average (0.05 kg/kkg) 
that is being achieved only by a very few mills, including one ECF 
mill. While this ECF mill achieved the AOX limit only with hardwood 
furnish, it did so without the level of flow reduction anticipated for 
Tier III. It is the Agency's judgment, based on trends in ECF 
technology development to date, that with recycle of pulping and 
evaporator condensates and bleach plant filtrates necessary to achieve 
a wastewater flow of 5 m3/kkg and removal of chlorides from 
filtrates (or at other points in the recovery cycle), commensurate 
reductions in the mass of chlorinated organic pollutants contained in 
wastewaters discharged also are likely to occur. For this reason, it is 
EPA's judgment that the Tier III AOX limit would be achievable by 
advanced ECF mills for both hardwood and softwood furnishes. It is also 
important to note that recently gathered data from TCF mills indicate 
that end-of-pipe AOX levels below detection limits can be achieved. For 
this reason, EPA expects that all TCF mills should be eligible to 
participate in this program (based solely on AOX performance) and that 
separate BAT/NSPS AOX limitations would be unnecessary. Therefore, it 
is the Agency's judgment that either advanced ECF or TCF mills will be 
capable of achieving this AOX limit for Tier III.
    Flow reduction and progress toward closed loop mill operations are 
very important long-term environmental goals because releases to all 
environmental media would be minimized. Review of currently available 
data and literature indicates that the numerical values set forth to 
define Tiers II (10 m3/kkg) and III (5 m3/kkg) are 
appropriately stringent reduced flow targets by comparison to current 
wastewater flow for mills with extended delignification technologies. 
Moreover, EPA indicated in the March 8, 1996 notice that the industry's 
``clean water alternative'' could be a MACT compliance alternative that 
conceptually will facilitate segregation, treatment, and reuse of 
condensates. Inclusion of pulping and evaporator condensates in these 
reduced flow targets is therefore both consistent with this potential 
alternative and appropriate in that it will foster even greater flow 
reduction through recycle and reuse of the greatest possible volume of 
process wastewater. While completely closed loop operations offer a 
theoretically desirable goal, EPA is concerned that without 
considerably more research and mill trials, the potential exists for 
cross-media transfers or product quality concerns.
    As EPA presently conceives the incentives program, a mill would 
qualify for incentives only if it agrees to accept permit limitations 
corresponding to the tier it selects (e.g., for Tier II, an AOX 
limitation of 0.10 kg/kkg and condensate and bleach plant wastewater 
flow of 10 m3/kkg) including all applicable bleach plant 
limitations (e.g., those corresponding to BAT Option B and the proposed 
NSPS). Those limitations would constitute BAT/NSPS for that mill. The 
permit developed for a mill participating in the incentives program 
also would need to contain all other permit limitations and conditions 
otherwise applicable to the mill, including any conventional pollutant 
limitations and standards established by these Cluster Rules, any water 
quality-based effluent limitations required under CWA section 
301(b)(1)(C), and best management practices (BMPs) provisions.
3. Legal Authority to Establish Incentives-Related BAT Limitations and 
NSPS
    EPA believes it has the legal authority to establish incentives-
related BAT limits for Tier I, Tier II, and Tier III applicable solely 
at the election of the regulated entity. (Similar arguments support 
EPA's preliminary NSPS determination.) Under CWA section 304(b)(2), EPA 
is authorized to identify a technology as BAT after taking into account 
a variety of factors, including the cost of achieving such effluent 
reduction, non-water quality environmental impacts and such other 
factors as the Administrator deems appropriate. In this instance, EPA 
believes the limits corresponding to each of the tiers would reflect 
BAT for any participating mill for the following reasons.
    First, having voluntarily agreed to make these limits enforceable 
in its permit, the mill represents to EPA that there is a technology 
that is the best available and economically achievable for that mill to 
achieve the limits. Thus, the costs of achieving the desired effluent 
reductions--evaluated against the mill's own choices--support the BAT 
finding. Second, EPA would conclude that a less stringent baseline BAT 
(e.g., for purposes of this discussion based on complete substitution) 
would not be BAT for such a mill on the date of promulgation because 
the mill is making investment and engineering decisions that would make 
a process focused solely on complete substitution technically and 
financially inappropriate (such as by over designing chlorine dioxide 
generation capacity). In other words, that process technology would not 
be ``best'' for those mills committed to moving beyond complete 
substitution to more stringent incentive-based limitations. Moreover, 
avoiding such over design would avoid unnecessary capital investments, 
with those investments possibly applied to projects to prevent other 
environmental impacts. Finally, application of incentives-related BAT 
limits would be completely voluntary; an Advanced Technology mill 
participating in the incentives program would always be free to forgo 
the incentives and to meet the baseline BAT limits instead.
    The same analysis justifying the various pollutant parameter limits 
for the baseline (i.e., non-incentives) BAT applies equally to the 
incentives-related BAT limits for those parameters, with the addition 
of progressively more stringent end-of-pipe AOX limits, limits 
pertaining to lignin content in

[[Page 36852]]

unbleached pulp and recycle of filtrates for Tier I, and reductions in 
condensate and bleach plant wastewater flows for Tiers II and III. See 
Section V.A.5 and 9. EPA believes, for the reasons discussed in Section 
X.A.2, above, it has the authority to establish incentive-based BAT 
limits for lignin content in unbleached pulp, for recycle of filtrates, 
and for reduced condensate and bleach plant wastewater flows. Kappa 
numbers limits (representing the lignin content of unbleached pulp) can 
be used to reduce the presence of precursors for chlorinated organic 
pollutants in a mill's wastewater. Recycle of filtrates to chemical 
recovery processes reduces the mass of precursors for chlorinated 
organic pollutants, as well as all other pollutants in these 
wastewaters, that would otherwise be discharged. Limits for condensate 
and bleach plant wastewater flows move mills toward closed loop 
operations, thereby dramatically reducing chlorinated organic 
pollutants and all other pollutants otherwise found in mill wastewater 
discharges. The basis for these limits is discussed in Section X.A.2 
above. EPA solicits comment on this approach, including the reasoning 
EPA offers in support of it.

B. Incentives Available Prior to Achievement of Incentives-Related BAT

1. Extended Compliance Schedules
    A major obstacle to implementing advanced technologies in this 
industry is the disjunction between the statutory requirement that 
mills comply immediately with BAT and the longer time frames usually 
associated with a mill's investment plans. While the immediate 
compliance requirements of the Act promote, in the short term, prompt 
implementation of proven BAT technologies--and hence deliver over the 
long term the environmental benefits associated with achieving the BAT 
limits--EPA is concerned that the statutory deadlines also can 
discourage mills in this industry from implementing technologies 
superior to the BAT technology. EPA believes that many mills, were it 
not for the BAT time constraints, would choose to invest in more 
advanced technologies than BAT because the long-term environmental, 
operational, and market competitiveness benefits would be 
correspondingly greater. Such investments, however, typically require 
more time than the statute allows, especially in this industry where 
capital investment cycles are five years or longer. Mills wishing to 
implement--or to design and pilot--more advanced technologies are often 
faced with an unattractive choice: either achieve BAT immediately with 
the risk that that technology will be overtaken imminently in whole or 
in part by more advanced technologies, or risk extended noncompliance 
with BAT in pursuit of superior performance levels. This is 
particularly the case here, where mills can design their bleach plants 
either to achieve BAT, such as that represented by Option A, or to 
adopt a long-term approach that includes more advanced extended 
delignification processes (such as those anticipated under Tier I) or 
TCF processes. For example, if immediate compliance with baseline BAT 
limitations (for purposes of this discussion Option A) were to be 
required, these mills may be compelled to expand chlorine dioxide 
generating capacity to meet those limitations immediately even though 
that expanded capacity would be unnecessary once their advanced systems 
are in place. See also 61 FR 9383, 9395 (March 8, 1996) where EPA 
discussed a similar quandary regarding how short-term compliance with 
MACT could create a disincentive to adopt more advanced wastewater 
control technology alternatives.
    EPA is considering addressing this tension through an incentive. 
Under this possible incentive, mills selecting an incentives-related 
BAT requiring immediate compliance with the limits corresponding to the 
chosen tier would receive additional time through an enforcement order 
to meet those limits. In this way, EPA hopes to give mills an incentive 
to implement advanced technologies and to accommodate the realities of 
capital investment cycles and complex implementation tasks such as flow 
reduction. Because the Clean Water Act requires immediate compliance 
with BAT limitations (including those contemplated by the incentive 
tiers), the permitting authority is foreclosed from establishing a 
longer deadline for compliance in the permit. However, the permitting 
authority is authorized to exercise its enforcement discretion to issue 
an accompanying enforcement order that includes a schedule by which the 
mill must achieve full compliance, including interim milestones as 
appropriate. This could also be accomplished through negotiated consent 
decrees under CWA section 309(a)(3). Extended compliance schedules 
established pursuant to this possible incentive would apply only to the 
BAT limitations and standards for Tiers I, II or III, including the 
baseline BAT bleach plant limits applicable to the mill. These extended 
compliance schedules would not govern compliance with other permit 
limitations and conditions, including those based on BCT, water quality 
concerns, or BMP requirements. Rather, any appropriate compliance 
periods pertaining to those requirements would need to be established 
under the authorities applicable to them.
    When EPA is the permitting authority, EPA would exercise its 
enforcement discretion to extend BAT compliance periods for mills that 
accept incentives-related BAT limitations and standards in their NPDES 
permit. In addition, at the time the proposed Advanced Technology 
permit is made available for public comment, EPA would also make 
available the proposed enforcement order in order to give the public 
adequate notice of and opportunity to comment on the length of time 
contemplated by the compliance schedule and the proposed interim 
milestones. When EPA is not the permitting authority, EPA would issue 
guidance to States strongly urging States to issue similar compliance 
orders to Advanced Technology mills and to follow the public notice 
procedures described above.
    EPA also would issue guidance strongly urging States to impose 
enforceable interim milestones as part of the compliance order that 
would incrementally benefit the environment during the interim period 
that would ensure that participating mills make reasonable progress 
toward achieving the superior performance represented by the various 
Advanced Technology Alternative BAT tiers. Where EPA is the permitting 
authority, EPA would impose such interim milestones itself. Milestones 
could include intermediate pollutant load and wastewater flow 
reductions in addition to research schedules, construction schedules, 
mill trial schedules, or other milestones appropriate to the advanced 
technology and the participating mill. EPA would encourage these 
interim milestones to be tailored to circumstances and process 
technologies at individual mills. The compliance order would also need 
to specify interim limits that function as the starting point for the 
mill's compliance schedule. EPA would issue guidance providing that the 
starting point for the in-plant limits and advanced technology AOX 
limit contained in the compliance orders would be no less stringent 
than existing effluent quality or the effluent limits imposed in the 
last permit, whichever are more stringent.
    EPA recognizes that compliance orders also would be available for 
mills choosing not to participate in the incentives program. Typically

[[Page 36853]]

compliance orders for baseline BAT limitations require compliance no 
later than three years from the date the permit imposing such 
requirements is issued. In this possible incentive, EPA contemplates an 
approach that would be different from this typical practice in two 
respects: First, the compliance schedules would be longer, ranging from 
five to fifteen years; second, the extended compliance period would 
commence on the date the Cluster Rules are promulgated, not on the date 
the permit incorporating the relevant limits is issued.
    With respect to the length of a compliance schedule for achieving 
incentives-related BAT limits and standards, EPA believes that the 
following time frames would be reasonable: Tier I--not later than five 
years beyond the effective date of the final rule; Tier II--not later 
than ten years beyond the effective date of the final rule; and Tier 
III--not later than fifteen years beyond the effective date of the 
final rule.
    EPA regards five years as a reasonable time frame to achieve the 
incentives-related BAT limitations and standards corresponding to Tier 
I (including the bleach plant BAT effluent limitations) if Option A is 
the selected BAT because Tier I limitations could be achieved using 
known technologies (Option B technologies) within that timeframe 
without the closures predicted for Option B. In addition, premature 
compliance with certain BAT limitations could lead to counterproductive 
outcomes (e.g., installation of either excess or completely unnecessary 
chlorine dioxide generating capacity).
    EPA regards ten years as a reasonable timeframe to achieve the 
incentives-related BAT limitations corresponding to Tier II because 
substantial flow reduction, to 10 m3/kkg, is the most difficult 
and time consuming element of this tier. Recycle of a substantial 
portion of pulping and evaporator condensates and bleach plant 
filtrates, with the attendant complexities of total mill balances for 
very large volumes of process water and wastewater, requires 
considerable time before it can be implemented successfully at mill-
scale. Nonetheless, achievement of enforceable interim milestones, 
including the BAT bleach plant limitations, in a period shorter than 
ten years is likely and should be required by the enforcement 
authority.
    EPA regards fifteen years as a reasonable timeframe to achieve the 
incentives-related BAT limitations corresponding to Tier III. As for 
Tier II, flow reduction again is the most difficult and time consuming 
task. However, because achieving or surpassing flow reduction to 5 
m\3\/kkg for pulping and evaporator condensates and bleach plant 
filtrates approaches a closed mill configuration, even more technically 
difficult and time consuming tasks must be successfully completed. This 
probably would include removal of metals and chlorides by ``kidney'' 
technologies in order to control system scaling and corrosion problems 
while maintaining product quality and minimizing cross-media impacts. 
Successful completion of these tasks at individual mills will involve 
extensive research and mill trials. Nonetheless, achievement of interim 
milestones, including the BAT bleach plant limitations and intermediate 
levels of flow reduction, in a period shorter than fifteen years is 
likely and should be required by the enforcement authority.
    EPA also believes that it has a reasonable basis to measure the 
extended time periods from the promulgation date of the Cluster Rules 
rather than from the date a participating mill's NPDES permit is 
issued. First, EPA wants to promote implementation of advanced 
technologies as soon as possible; if EPA were to measure the extended 
compliance period from the date of permit reissuance, compliance with 
Tier I limits could be deferred by as much as ten years from the date 
of promulgation. Second, EPA has determined that many mills in the 
proposed bleached papergrade kraft and soda subcategory are discharging 
under permits that have already expired, that will expire soon after 
the promulgation of the Cluster Rules, or that have reopener clauses to 
allow the permitting authority to adjust the permit to reflect the new 
effluent guideline limitations. EPA expects that permit writers will 
reissue these permits promptly after the Cluster Rules are published. 
Thus, the decision to measure an extended compliance period from the 
date of promulgation rather than from the date of permit issuance 
should have little practical effect on most mills. Third, mills in the 
proposed bleached papergrade kraft and soda subcategory have been on 
notice since at least 1993 that EPA was considering basing some portion 
of its Cluster Rules on extended delignification technologies. (In its 
1993 proposal, EPA proposed to base BAT limitations on a process that 
included oxygen delignification and 100 percent substitution of 
chlorine dioxide for elemental chlorine.) In some cases, that proposal 
has already influenced investment decisions at some mills. Finally, 
with the issuance of this notice detailing EPA's possible incentives 
program, mills potentially interested in participating can plan 
accordingly with little prejudice.
    EPA acknowledges that a mill choosing not to participate in the 
advanced technology incentives program in some cases could obtain a 
three-year compliance schedule that, depending on the date its permit 
was reissued, could allow that mill to achieve BAT limits (including a 
less stringent AOX limit) at a later date than Advanced Technology 
mills would be required to achieve a lower AOX value and lower kappa 
numbers and filtrates recycling. However, EPA cannot foresee any 
circumstances in which such relief would be deemed necessary by the 
permitting authority.
    Although EPA is considering implementing this incentives program 
through enforcement orders, EPA also recognizes that mills may be 
discouraged from participating in the program by the uncertainty 
inherent in obtaining additional time to comply through enforcement--
rather than permitting--mechanisms. In order to address this 
uncertainty, EPA also is considering establishing an Alternative BAT at 
the Tier I level that would be effective five years from the date of 
promulgation, a second Alternative BAT at the Tier II level that would 
be effective ten years from the date of promulgation, and a third 
Alternative BAT at the Tier III level that would be effective fifteen 
years from the date of promulgation.
    If EPA were to adopt a structure of Alternative BAT limitations at 
the Tier I, Tier II, and Tier III levels, EPA would codify ``Tier I 
Alternative BAT limits,'' ``Tier II Alternative BAT limits,'' and 
``Tier III Alternative BAT limits'' in addition to the incentives-
related BAT limitations for those tiers that would be effective 
immediately. Those Alternative BAT limits would apply--on a purely 
voluntary basis--to any mill in the proposed bleached papergrade kraft 
and soda subcategory choosing to gain additional time for compliance 
with the selected tier alternative BAT limits through a permitting 
rather than enforcement mechanism. Any mill that voluntarily chooses 
this Alternative BAT approach would qualify for any incentives 
applicable to the appropriate tier once it achieves the Alternative BAT 
limits for that tier.
    The Alternative BAT limits would probably consist of two phases. 
The first phase would commence on the date the Cluster Rules are 
promulgated and would terminate five years from the date of 
promulgation for Tier I, ten years

[[Page 36854]]

from the date of promulgation for Tier II, and fifteen years from the 
date of promulgation for Tier III. During the first phase, any permit 
issued to a participating mill would need to include, as BAT 
limitations, interim effluent limits that would be equivalent either to 
the limits in the mill's last permit or to the mill's current effluent 
quality, whichever is more stringent. These first phase interim BAT 
limits would be effective immediately. The permit also would need to 
include any water quality-based effluent limitations required under CWA 
section 301(b)(1)(C) and any other applicable requirements including 
any BMPs required by these rules. The purpose of the interim BAT limits 
in the first phase would be to ensure that, at a minimum, current 
effluent quality is maintained while the mill moves toward achieving 
limits corresponding to the tier selected by the mill. During the 
second phase, the permit limits would be made more stringent to 
correspond to the tier limits the mill has committed to achieve. Those 
limits would be effective five years from the date the Cluster Rules 
are promulgated for Tier I, ten years for Tier II, and fifteen years 
for Tier III. Thus, mills electing to accept Alternative BAT at Tier I 
would have the appropriate limits and standards and any appropriate 
interim milestones leading toward achievement of the ultimate 
Alternative BAT Tier I limits incorporated into its permit as soon as 
it is reissued; the Tier I limits and standards, however, would not be 
``effective'' until five years from the date of promulgation of the 
Cluster Rules. Mills electing to accept Alternative BAT Tier II limits 
would be required to meet interim BAT limits reflecting, at a minimum, 
existing effluent quality for the first five year permit term and any 
appropriate interim milestones leading toward achievement of the 
ultimate Alternative BAT Tier II limits selected by that mill. The 
second five year permit term would incorporate those interim limits, 
any further interim milestones, and the ultimate Alternative BAT Tier 
II limits which would become effective ten years from the date of 
promulgation of the Cluster Rules. Similarly, mills electing to accept 
Alternative BAT Tier III limits would maintain limits reflecting, at a 
minimum, existing effluent quality for the first and second five year 
permit terms (total of ten years), with any appropriate interim 
milestones leading toward achievement of the ultimate Alternative BAT 
Tier III limits selected by that mill. The third five year permit term 
would incorporate those interim limits, any further interim milestones, 
and the Alternative BAT Tier III limits, which would become effective 
fifteen years from the date of promulgation of the Cluster Rules.
    The only practical difference between the Alternative BAT structure 
with delayed effective dates and the other incentives-related BAT 
limitations, effective immediately, is the mechanism by which the 
participating mill receives additional time to achieve the tier limits. 
Under the Alternative BAT approach, the mechanism is the permit; under 
the other approach, the mechanism is an enforcement order. Mills 
choosing either approach will be required to maintain, at a minimum, 
existing effluent quality during the interim period before the date the 
ultimate BAT limits become enforceable. Mills under either approach 
also would be subject to interim milestones as appropriate. Finally, at 
the end of either five or ten or fifteen years from the date of 
promulgation of the Cluster Rules, every mill participating in the 
incentives program would be expected to achieve the final BAT limits 
represented by Tier I, Tier II, or Tier III. Thus, the only difference 
between the enforcement approach and the Alternative BAT structure 
would be the mechanism, not the result.
    EPA believes it has the authority to adopt the Alternative BAT 
approach for the incentive tiers, which includes delayed effective 
dates. The delayed effective dates are intended to make the underlying 
tier technologies the best available technologies economically 
achievable for mills willing to go beyond the baseline BAT by allowing 
those mills more time to develop and implement technologies and plan 
for capital expenditures. EPA solicits comment on the alternative BAT 
approach. EPA also solicits comment regarding the applicability of this 
incentives-related program to new sources, including the 
appropriateness of ``Alternative NSPS.''

C. Incentives Available After Achievement of Advanced Technology BAT 
Limitations and NSPS

1. Greater Certainty Regarding Permit Limits and Requirements
    Some industry stakeholders have suggested to EPA that mills could 
be encouraged to implement advanced technologies if they had a 
reasonable assurance that all limitations and conditions in their 
permits would remain constant over a specified period of time, once 
compliance with the Advanced Technology limits and standards is 
achieved. EPA seeks comment on this incentive and on the details 
described below.
    Under this incentive, EPA would issue guidance urging states, where 
allowed by state law, to administratively extend the permits of 
Advanced Technology mills for up to five years past the date the 
Advanced Technology permit would otherwise expire, subject to the 
following conditions. First, this incentive would be available only for 
the first permit issued after the facility achieves full compliance 
with its incentives-related BAT limits or NSPS, as appropriate. Second, 
as part of the permitting process, the permitting authority would 
inform the public that it regards the AT facility as a low priority for 
permit reissuance in the next permitting cycle and that it will 
consider allowing the permit (after it expires five years hence) to 
continue to be administratively extended for up to five additional 
years provided that the permittee has filed a timely application and 
that the permitting authority possesses no new water quality or 
facility-related data that would justify new or different permit 
conditions and limits. In EPA's view, the permitting authority could 
reasonably conclude at the time the AT permit would ordinarily be 
reissued, that the permit is a low priority for permit reissuance if 
there is no new water quality- or facility-related data or information 
that would justify new or different limits. Under these circumstances, 
EPA believes it would be reasonable for a permitting authority to 
conclude that the AT facility is a lower priority for permit reissuance 
because the mill is voluntarily achieving reductions greater than 
otherwise required by the effluent guidelines and hence presents a 
lower risk to water quality than other mills. Moreover, EPA expects 
that the permit eligible for an administrative extension already would 
contain BMPs and any water quality-based effluent limits necessary to 
achieve applicable water quality standards. Thus, EPA would not expect 
any adverse effect on the environment during the period the permit is 
administratively extended, in the absence of specific information 
indicating that more stringent water quality effluent limits need to be 
imposed.
    EPA would also issue guidance urging states, when they reissue AT 
permits, to reissue without changing the terms and conditions contained 
in the initial AT permit, unless the permitting authority receives new 
facility- or watershed-specific information indicating that more 
stringent effluent limits are necessary to achieve applicable water

[[Page 36855]]

quality standards. In that case, EPA is considering issuing guidance to 
urge states to develop priorities for allocating any necessary load 
reductions in a way that gives preference to AT mills, particularly 
where AT mills contribute a small portion of the total pollutant loads 
to the stream. Moreover, where more than one AT mill discharges in a 
watershed, these priorities would further give preference first to Tier 
III mills, then to Tier II, and finally to Tier I mills. EPA seeks 
comment on this possible incentive.
2. Reduced Effluent Monitoring
    EPA believes that reduced monitoring provisions would be 
appropriate to include in the final water regulation for mills that 
achieve incentives-related BAT limitations or NSPS, as appropriate. In 
EPA's view, consistent and successful implementation of the advanced 
technologies will make it increasingly less likely that the pollutants 
controlled by incentives-related BAT will be present in the wastewater 
from advanced technology fiber lines in levels of concern. Because of 
these reductions and because in-plant monitoring for these pollutants 
tends to be costly, EPA believes it is reasonable to allow mills 
achieving the incentives-related BAT limits or NSPS, as appropriate, to 
monitor less frequently for those pollutant parameters after 
establishing a reliable baseline of consistent achievement of those 
incentives-related BAT limits/NSPS. (This incentive would be adopted 
only if EPA decides to retain the monitoring requirements applicable to 
the entire proposed subcategory regardless of the BAT option selected.)
    As part of an initiative separate from the incentives program being 
considered solely for the pulp and paper industry, EPA also has issued 
interim guidance on a performance-based schedule of reductions in the 
frequency of monitoring in NPDES permits. This separate initiative 
would be applicable to all industrial point sources, including pulp and 
paper mills choosing to comply with baseline BAT and not participate in 
the incentives program, where a facility consistently performs better 
than its permit limits. Under that initiative, facilities become 
eligible after passing through a set of entry criteria based on 
compliance history and review of two or more years of data 
demonstrating better than BAT performance. On a parameter by parameter 
basis, the greater the percentage of ``beyond BAT'' performance, the 
greater the reductions in required monitoring frequency. A statistical 
model was used to determine the reductions in monitoring frequencies 
that would lead to little or no increase in the potential of detecting 
discharges in excess of permit limits. See the post-proposal rulemaking 
record for additional details of this emerging performance-based 
monitoring program, as set forth in interim guidance dated April 19, 
1996.
    The reduced monitoring incentive being considered specifically for 
this effluent limitations guideline would be incorporated in the Code 
of Federal Regulations, and is summarized as follows:
    a. For any TCF process under Tiers I, II, and III, particularly for 
facilities with newly established TCF processes, the final regulation 
would require weekly end-of-pipe monitoring for AOX for the first six 
months to confirm that AOX is not present in detectable levels, and 
thereafter no monitoring for any pollutant controlled by the 
incentives-related BAT at the bleach plant or end-of-pipe AOX, provided 
that such facilities certify annually that they are using only totally 
chlorine-free processes. EPA seeks comment on any monitoring 
alternatives and invites suggestions regarding the content of such 
certification. EPA also particularly welcomes suggestions regarding 
indicators of totally chlorine-free processes, such as raw materials, 
process chemicals used and process variables, and products generated. 
EPA also seeks comment on how this incentive could apply at mills that 
swing from TCF to non-TCF processes.
    b. For any ECF process under Tiers I, II, and III, an Advanced 
Technology mill would be required to perform in-plant monitoring of all 
pollutants controlled by incentives-related BAT, as applicable, on a 
monthly basis for one year. The mill would also be required for a year 
to perform weekly monitoring at the end of the pipe for at least AOX. 
That one year period must include ``worst case'' conditions for 
generation of chlorinated organic pollutants. In the event that 
reasonably anticipated ``worst case'' conditions do not occur in the 
first year but occur later on during a period of certification, limited 
monitoring of those ``worst case'' conditions would be required to 
confirm compliance with the incentives-related BAT limitations, with 
certification thereafter. If after one year of monitoring the advanced 
technology mill demonstrates that it is discharging pollutants at 
levels at or below the applicable BAT limits and standards, then it 
would not be required to monitor at the bleach plant for any pollutant 
controlled by BAT and would be authorized to monitor AOX at the end-of-
pipe on only a monthly basis, provided that the facility submits an 
annual certification.
    EPA invites suggestions regarding the content of such certification 
and particularly seeks comment on relevant indicators of Tier I 
processes, such as raw materials used (e.g., softwood), process 
chemicals used and process variables (e.g., complete substitution of 
chlorine dioxide and elimination of hypochlorite at all times, 
bleaching chemical application factors such as active chlorine 
multiple), and products generated (notably, their ISO brightness), 
that, when taken together, lead to worst case circumstances for 
potential generation of chlorinated organic pollutants (e.g., TCDD, 
TCDF, chloroform, etc.). Minimum monitoring as stringent as that 
proposed to be required by the rules for BAT and PSES would resume if a 
violation occurs on the Advanced Technology fiber line and would 
continue until the correction and compliance is confirmed.
    As an alternative to performing annual monitoring for pollutants 
regulated at the bleach plant is not done to verify a certification 
(for any Tier), mills could elect to implement the principles of 
environmental management systems (EMS) in order to qualify for this 
incentive. Weekly end-of-pipe monitoring would be required for AOX, and 
monthly monitoring would be permitted after compliance is established.
    EPA seeks comments on this possible incentive, in particular with 
respect to the nature of a certification, the frequency of reduced 
monitoring, and methods of insuring the regulatory authorities and 
citizens have adequate information regarding the mill's environmental 
practices.
3. Reduced penalties
    In recognition of the considerable capital expenditures that mills 
participating in the incentives-related Alternative BAT program will 
make to implement advanced technologies and to achieve pollutant 
reductions superior to those achievable through the baseline BAT, EPA 
is considering encouraging enforcement authorities to take into account 
those investments as appropriate when assessing penalties against these 
mills for violations of environmental statutes. EPA believes existing 
EPA settlement policies can be interpreted to provide consideration of 
advanced technology investments, where the evidence of environmental 
good faith is clear and unequivocal and circumstances are such that 
failing to take such investments into account would be a manifest 
injustice. See

[[Page 36856]]

Spang & Company, EPCRA Appeal No. 94-3 & 94-4 at 27-30 (Oct. 20, 1995). 
In EPA's view, if a facility has installed and is operating the 
advanced technology in good faith, reports violations in a prompt 
manner to EPA or the State, and either corrects the violations in a 
timely manner or agrees to and complies with reasonable remedial 
measures concurred on by the primary enforcement authority, then the 
enforcement authority would be justified in taking the AT investment 
into account in determining economic benefit and in reducing the 
gravity portion of the penalty up to 100 percent. EPA assumes that the 
installation and operation of any advanced technology will be more 
expensive than the installation and operation of the technology 
underlying the baseline BAT and therefore the advanced technology 
facilities will derive no economic benefit (i.e., zero BEN) from the 
violation associated with the advanced technology. This would be the 
case even when the advanced technology fails, as long as the design, 
operation and installation are within applicable engineering standards 
and operational procedures are within industry norms. The decision 
whether to take such AT investments into account in determining 
economic benefit would be left to the State's discretion when the State 
is the enforcing authority. EPA would issue guidance to clarify 
application of this incentive.
    Mills also can take advantage of the recently issued audit policy 
providing they meet the criteria specified in that policy. (See the 
Federal Register for December 22, 1995, 60 FR 66706.) Moreover, EPA 
also is considering issuing guidance to interpret EPA's existing media-
specific settlement policy in cases where advanced technology does not 
perform as well as initially required by limits included in NPDES 
permits but where interim milestones have been met and good faith 
efforts have been demonstrated. EPA welcomes comments on this possible 
incentive.
4. Reduced inspections
    As another possible incentive, EPA is considering issuing guidance 
to the Regions indicating that mills with advanced technology fiber 
lines should be a lower priority for routine inspections in all media. 
Under this incentive, facilities achieving advanced technology limits 
would be targeted by EPA for routine inspections not more than once 
every two years. This incentive would reflect EPA's view that mills 
installing and operating advanced technologies at levels to meet the 
appropriate tier effluent limits are likely to be complying with the 
other permit requirements applicable to that fiber line. EPA already 
has redirected Federal NPDES inspections away from annual inspections 
of all major dischargers to focus on high risk facilities on priority 
watersheds. Targeted efforts in these priority watersheds focus on such 
factors as facility compliance status and rates, location and affected 
population, citizen complaints, etc. Nonetheless, under this incentive, 
EPA would reserve the authority to conduct multi-media inspections 
without prior notice, and to inspect advanced technology fiber lines 
for cause, whether or not there is an ongoing violation. EPA would also 
reserve its right to inspect an advanced technology mill in the 
connection with watershed or airshed concerns. EPA seeks comment on 
this possible incentive. EPA is particularly interested in comments on 
the question whether reduced inspections should apply mill-wide and 
across various media and, if so, why.
5. Public Recognition Programs
    While EPA public recognition programs already exist, the Agency 
believes that it would be appropriate to develop and implement a 
program unique to this industry as an incentive to advanced technology 
investments. As part of a public recognition program, EPA would 
establish criteria for mills to qualify for public recognition on an 
annual basis. In addition to commitments leading to and achievement of 
the limits specified in the selected tier, such criteria could include 
the use of the principles of environmental management system (EMS) 
programs. EPA would then recognize the qualifying mills each year 
through a public event. EPA would describe this program in greater 
detail in the preamble to the final Cluster Rules. EPA solicits comment 
on this possible incentive, the applicable criteria, the type of 
recognition accorded, and the period of recognition.
6. Fast-Track Permit Modification
    EPA is considering issuing guidance encouraging states to accord 
permit process priority for advanced technology mills where it is 
consistent with watershed-based permitting strategies and air 
permitting policies. EPA solicits comment on whether this is an 
appropriate policy and on the availability of resources for 
implementing such a policy.

D. Solicitations of Comments on Incentives Program

    In addition to all of the specific comment solicitations above, EPA 
seeks comment on the entire concept of establishing a voluntary program 
of advanced technology tiers with incentives-related BAT limits/NSPS 
unique to those tiers. EPA also seeks comment on the criteria defining 
each tier, including both the type of criteria and the numeric values 
ascribed to each. EPA also seeks comment regarding the philosophy EPA 
should adopt in establishing the incentives-related BAT limits and NSPS 
being considered to define the advanced technology tiers, and how these 
incentives-related alternative BAT limits/NSPS could be adapted to 
mills with indirect discharge to POTWs. EPA seeks comments and welcomes 
suggestions regarding the incentives offered and alternatives that 
might be included, and other ways of implementing the program. EPA 
seeks comments on defining and implementing such a program for other 
bleached chemical pulp subcategories, including the papergrade sulfite 
subcategory, the dissolving sulfite and dissolving kraft subcategories, 
and other subcategories for which EPA may develop revised effluent 
limitations based on BAT.

E. Alternative Incentives Programs and Provisions Suggested by 
Stakeholders

    One of the principal objectives of this proposed incentives program 
is to promote pollution prevention technologies and practices. In EPA's 
view, each of the advanced technologies has a significant pollution 
prevention component with respect to effluent discharges. Nevertheless, 
in comments on the proposed regulations, industry voiced concerns that 
operation of technology options could produce increased emissions to 
the air and consequently trigger major New Source Review (``NSR'') 
under the Clean Air Act.
    In its March 8, 1996, Federal Register Notice discussing the MACT 
portion of the Cluster Rules, EPA acknowledged concerns about the 
interaction between the installation of MACT emission controls and the 
NSR requirements. (See 61 FR 9383, 9396). In particular, EPA noted that 
commenters expressed concern that EPA had not accounted for the impacts 
that would be incurred in triggering major NSR such as costs associated 
with permitting and implementation requirements, the burden imposed on 
state air quality offices, or the risk that delays in receiving major 
NSR preconstruction

[[Page 36857]]

permits might jeopardize timely compliance with the MACT portion of the 
Cluster Rules. Id. EPA considered those comments and the air pollutant 
reductions, environmental and energy impacts of implementing the MACT 
technologies. In response, EPA stated in its March Notice that it 
considers projects implemented to comply with the MACT portion of the 
Cluster Rules to be environmentally beneficial from an air quality 
perspective and hence eligible for exemption from major NSR as air 
pollution control projects under policy guidance issued by EPA on July 
1, 1994. Id. EPA also noted that it expects such projects to qualify as 
pollution control projects under the NSR reform regulations, signed on 
April 3, 1996. EPA solicited comment on these determinations and on the 
question whether EPA should provide a specific exclusion in the major 
NSR rules for controls installed to comply with the MACT portion of the 
Cluster Rules. (See 61 FR 9396.)
    Some members of the pulp and paper industry have suggested to EPA 
that controls installed to achieve incentives-related Alternative BAT 
limits corresponding to Tiers I, II or III should also be excluded from 
major New Source Review and have suggested that such an exclusion would 
be a significant incentive to encourage mills to install advanced water 
technologies. EPA is not prepared to offer such an incentive at this 
time. Unlike the MACT-related controls that EPA considers to be 
eligible for exemption from major NSR, advanced water technologies may 
not have a consistently positive effect on air emissions. EPA intends 
to address these cross-media issues in the context of its NSR Reform 
rulemaking proposal, which was signed on April 3, 1996. In that 
rulemaking proposal, EPA is soliciting comment on the broader issue of 
whether applicability of the pollution control project exemption should 
be extended to ``cross media'' pollution control projects generally and 
whether and how they should be required to meet the ``environmentally 
beneficial'' test typically required for pollution prevention projects. 
EPA recognizes that resolution of this issue is of particular interest 
to mills in the proposed bleached papergrade kraft and soda subcategory 
because of the possible value of this exemption as an incentive to 
implement advanced water technologies. EPA nevertheless believes that 
the question whether the pollution control project exemption should be 
extended to ``cross media'' pollution control projects should be 
resolved on a broad, rather than industry-specific, basis. Accordingly, 
EPA is not including as a possible incentive in today's notice a 
provision that would exempt advanced water technologies from major NSR.
    In order promote full consideration of this issue, however, EPA 
welcomes comments in connection with today's notice on whether advanced 
water pollution control technology implemented by the pulp and paper 
industry should be eligible for an exclusion from major NSR (assuming 
that such technology increases air emissions in significant amounts at 
an existing major source) and, if so, whether the exclusion should be 
implemented under the provisions of the pollution control projects 
exclusion under the NSR proposed regulations. Specifically, EPA 
solicits comments on whether there are pollutant increases from such 
water pollution control projects, the nature of any such pollutant 
increases in terms of process conditions and equipment changes, and the 
types of air pollutants likely to increase that would warrant this 
special treatment. EPA also solicits comment on the type of criteria 
that should be used to evaluate the cross-media impacts of pollution 
control projects to determine whether the overall environmental 
benefits to one media are sufficient to waive environmental reviews and 
requirements otherwise applicable for other media and, if so, whether 
the project should be allowed to qualify under the proposed major NSR 
exclusion. EPA also solicits comments, with supporting rationale, on 
whether an exemption for cross-media pollution control projects should 
be extended to any project that achieves the required levels of control 
or whether, because of the cross-media nature of the controls, the 
exemption should be available only for controls that achieve greater 
than the required levels of treatment.
    In addition to recommendations for incentives submitted by one 
group of four industry stakeholders (see the record at DCN 13930), an 
alternative set of recommendations for an incentives program was 
submitted by a group of seven companies in the pulp and paper industry 
(see the record at DCN 13937). Among other things, the latter proposal 
recommended that the incentives program be: broad-based, applicable to 
mills regulated under the Cluster Rules and available on a mill-by-mill 
basis and that it be extended throughout the individual mills 
participating in the program; available for mills using any processes 
or practices (with no restrictions) that achieve reductions of 25-30 
percent (Tier I), and 55-60 percent (Tier II) for at least any two 
water pollutants (an eighth company recently endorsing this proposal 
also suggested that the two pollutants selected could be water or air 
pollutants; see the record at DCN 13965) regulated under the effluent 
guidelines portion of the Cluster Rules (excluding dioxin, furan, and 
the chlorinated phenolic pollutants), with Tier II mills also 
committing to achieving mill-wide process water usage of 12,000-14,000 
gallons/short ton (50-58 m3/kkg) of pulp; and that it be expanded 
beyond the proposed bleached papergrade kraft and soda subcategory. 
Among the incentives suggested in this alternative program were: 
extended compliance period of five years for Tier I mills and 15 years 
for Tier II mills; extended permit terms, including an administrative 
presumption of additional time during which incentive-based effluent 
limits are not changed, for five years (total of ten years) beyond the 
prevailing statutory permit term for Tier I mills, and ten years (total 
of 15 years) beyond the prevailing statutory permit term for Tier II 
mills; and other provisions similar in principle but often differing in 
details to those in the program discussed above (e.g., fast track 
permitting, exemptions from PSD/NSR, reduced penalties, etc.). This set 
of alternatives also proposed a similar incentives program for mills 
that elect to achieve more stringent control of air emissions than 
required by the MACT standards.
    Another set of alternative recommendations was submitted by a 
vendor of process technologies and raw materials used in the pulp and 
paper industry (see the record at DCN 13932). This set of alternative 
recommendations suggested that, in addition to achieving pollutant 
reductions greater than required by limits based on BAT, mills would be 
required to demonstrate that they achieve minimization in resource use 
(i.e., fiber, water, and energy consumption) and reduction (or at a 
minimum no increase) in air emissions or solid wastes. This alternative 
set of recommendations suggested as criteria for participation in the 
program a 10 percent reduction below COD limits (rather than AOX 
limits) promulgated by EPA, a bleach plant flow of 20 m3/ADMT (air 
dry metric tons), and use of process simulation techniques to identify 
practices that go beyond the minimum BMPs incorporated in the final 
rule.
    Another suggested component of an incentives program involves 
Federal procurement. The President's Executive Order 12873, ``Federal 
Acquisition, Recycling, and Waste Prevention'' (58

[[Page 36858]]

FR 54911, October 22, 1993), establishes a Federal policy for 
procurement of environmentally friendly products. EPA solicits comment 
on whether it also is appropriate and effective public policy to 
provide a Federal procurement advantage to paper products containing 
pulp or paper from mills that achieve incentives-related BAT 
limitations or NSPS, as appropriate, corresponding to the Advanced 
Technology tiers or that otherwise demonstrate performance more 
stringent than that which is based on the baseline BAT/NSPS. Such an 
advantage might be a Federal agency preference for such paper products, 
consistent with other Federal preferences (e.g., recovered materials 
content) and Federal procurement law. EPA also solicits comment on the 
mechanics of implementing this type of a procurement preference.
    EPA solicits comments on these alternate incentives programs, 
particularly regarding those components which differ from the 
incentives program described Section X through X.C of this notice, and 
how the most useful components of these alternate programs may be 
incorporated into an incentives program in the final rules.

    Dated: July 2, 1996.
Robert Perciasepe,
Assistant Administrator for Water.
[FR Doc. 96-17802 Filed 7-12-96; 8:45 am]
BILLING CODE 6560-50-P