[Federal Register Volume 64, Number 162 (Monday, August 23, 1999)]
[Proposed Rules]
[Pages 46058-46089]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-21415]



[[Page 46057]]

_______________________________________________________________________

Part III





Environmental Protection Agency





_______________________________________________________________________



40 CFR Part 122 et al.



Revisions to the National Pollutant Discharge Elimination System 
Program and Federal Antidegradation Policy in Support of Revisions to 
the Water Quality Planning and Management Regulation; Proposed Rule

  Federal Register / Vol. 64, No. 162 / Monday, August 23, 1999 / 
Proposed Rules  

[[Page 46058]]



ENVIRONMENTAL PROTECTION AGENCY

4O CFR Parts 122, 123, 124, and 131

[OW-FRL-6424-3]
[RIN-2040-AD36]


Revisions to the National Pollutant Discharge Elimination System 
Program and Federal Antidegradation Policy in Support of Revisions to 
the Water Quality Planning and Management Regulation

AGENCY: Environmental Protection Agency.

ACTION: Proposed rule.

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

SUMMARY: Today's action revises, clarifies and strengthens the 
Environmental Protection Agency's (EPA's) National Pollutant Discharge 
Elimination System (NPDES) Program and Water Quality Standards (WQS) 
Regulation under the Clean Water Act (CWA). Today's proposed rule is 
intended to achieve two objectives. The first objective is to achieve 
reasonable further progress toward attaining water quality standards in 
impaired waterbodies prior to EPA approval or establishment of a Total 
Maximum Daily Load (TMDL). To achieve this objective, EPA is proposing 
explicit language describing the Agency's discretionary authority to 
object to, and reissue, if necessary, State-issued expired and 
administratively-continued permits authorizing discharges into impaired 
waterbodies in the absence of an EPA approved or established TMDL. EPA 
would exercise this authority to ensure that those permits are 
consistent with water quality standards. Also to achieve this 
objective, EPA is proposing to require that selected dischargers offset 
any increase in mass loadings of a pollutant(s) causing the 
nonattainment of water quality standards in an amount that would result 
in reasonable further progress toward attainment of water quality 
standards.
    The second objective is to achieve reasonable assurance that an 
established TMDL will be implemented. To achieve this objective, EPA is 
proposing explicit language describing EPA's discretionary authority to 
object to, and reissue, if necessary, State-issued expired and 
administratively-continued permits authorizing discharges into impaired 
waterbodies with established and approved TMDLs. EPA would exercise 
this authority to ensure that those permits are consistent with 
applicable wasteload allocations in a TMDL. Also to achieve this 
objective, EPA is proposing explicit language describing the authority 
of both EPA and States with approved NPDES programs, to designate 
certain currently unregulated sources as sources that would require an 
NPDES permit.

DATES: Comments on this proposal must be received, postmarked or 
delivered by hand on or before October 22, 1999.

ADDRESSES: Send written comments on the proposed rule to W-99-04, 
NPDES/WQS, Comment Clerk, Water Docket, Environmental Protection 
Agency, 401 M Street, SW, Washington, DC 20460. Comments can also be 
submitted electronically to OW-D[email protected] (see ``DOCKET'' section 
below). A copy of the supporting documents cited in this proposal is 
available for review at EPA's Water Docket; 401 M Street, SW, Mail 
code: EB57, Washington, DC 20460.

FOR FURTHER INFORMATION CONTACT: Kim Kramer, Office of Wastewater 
Management, 401 M St., SW, Washington, DC 20640, Mail Code 4203, e-
mail: Kramer.K[email protected], telephone: (202) 260-9541 for information 
regarding the NPDES provisions, or Susan Gilbertson, Office of Science 
and Technology, 401 M St., SW, Washington, DC 20460, Mail Code 4305, e-
mail: Gilbertson.S[email protected], telephone: (202) 260-7301 for information 
regarding the water quality standards provisions.

SUPPLEMENTARY INFORMATION:

A. Table of Contents of This Preamble

I. Purposes and Objectives of Today's Proposed Rules
II. Proposed Requirements for New and Significantly Expanding 
Dischargers Located on Impaired Waters
    A. Who Would Be Subject to This Proposal?
    1. Which Sources Discharge New Pollutant Loads to a Waterbody?
    2. Would Dischargers Who are Currently Discharging but Move 
Their Outfall(s) to Another Waterbody Be Subject to This Proposal?
    3. Will The Proposed Changes to the Definitions of a New 
Discharger and an Existing Source Affect Their Application Elsewhere 
in the Regulations?
    4. Would Any Existing Dischargers Be Subject to This Proposal?
    5. How is EPA Proposing to Define A ``Significant Expansion'' of 
an Existing Discharger?
    B. What are the Proposed Changes to the Federal Antidegradation 
Policy?
    1. What is the Current Federal Antidegradation Policy?
    2. What Were the Recommendations of the TMDL Federal Advisory 
Committee?
    3. What Revisions is EPA Proposing Today?
    i. Why is EPA Proposing to Require Dischargers Subject to This 
Proposal to Achieve Reasonable Further Progress Toward Attaining 
Water Quality Standards?
    a. How Does This Relate to the TMDL FACA Committee's 
Recommendations?
    b. Has This Approach Been Used in Other Statutes?
    ii. How is EPA Proposing to Define Reasonable Further Progress?
    a. Has Reasonable Further Progress Been Defined Under Other 
Statutes?
    iii. What Offsets Would Affected Dischargers Need to Obtain to 
Ensure Reasonable Further Progress?
    a. Could Offsets be Obtained From Existing Nonpoint Sources?
    b. Could the Director Vary the Amount of the Offset?
    iv. Would the Reasonable Further Progress Requirements Apply to 
Affected Dischargers Proposing to Discharge to All Waters of the 
U.S.?
    v. Why is EPA Proposing to Subject Only New Dischargers and 
Existing Dischargers Undergoing a Significant Expansion to These 
Requirements?
    vi. Would All New Dischargers and Existing Dischargers 
Undergoing a Significant Expansion Be Subject to These Proposed 
Requirements?
    a. How Would This Proposal Facilitate the Establishment of 
Trading Markets?
    C. How Would EPA Ensure any Needed Changes to the 
Antidegradation Policies in State, Territorial and Tribal Water 
Quality Standards?
    D. How Would These Changes Be Implemented Through NPDES Permits?
    1. Must the New or Significantly Expanding Discharger Obtain an 
Offset of the Same Pollutant(s) the New or Significantly Expanding 
Discharger Would Be Required to Offset?
    2. From What Geographic Area Would the Pollutant Load Reductions 
Need to Be Obtained?
    3. Could the Pollutant Load Reductions Come From a Source With 
Existing Requirements to Reduce its Loads?
    4. When Would the Pollutant Load Reductions Need to Be Obtained?
    5. How Long Would the Pollutant Load Reductions Need to Be 
Maintained?
    6. What Would Be Required When the Source of the Offset is an 
Existing Point Source?
    7. What Would Be Required When the Source of the Offset is an 
Existing Nonpoint Source?
    8. How Would Offsets Be Obtained From Sources Seeking Coverage 
Under a General Permit?
    i. What Options is the Agency Considering?
    ii. What If a Notice of Intent Form is Not Required?
    iii. Who and Under What Circumstances Would Need to Submit a 
Supplemental Certification?
    iv. How Would Offsets Be Determined for Dischargers Regulated 
Solely by BMPs?
    E. Additional Proposed Modifications to Related NPDES Provisions
    1. How is EPA Proposing to Modify the Water Quality-Based 
Permitting Regulations?

[[Page 46059]]

    2. How is EPA Proposing to Modify the Regulations Pertaining to 
the Statement of Basis and Permit Fact Sheet?
III. Proposed Authority to Designate Additional Sources of 
Pollutants to the NPDES Program
    A. How Would Animal Feeding Operations and Aquatic Animal 
Production Facilities Be Affected by Today's Proposal?
    1. How Do These Sources Become Subject to the NPDES Program?
    i. Under What Circumstances Are CAFOs Designated on a Case-By-
Case Basis?
    ii. Under What Circumstances are CAAPFs Designated on a Case-by-
Case Basis?
    2. Why is EPA Proposing Changes to the CAFO and CAAPFs 
Jurisdictional Regulations?
    i. How Do Animal Feeding Operations Impact Water Quality?
    ii. How Do Aquatic Animal Production Facilities Impact Water 
Quality?
    3. What Changes is EPA Proposing to Make to the CAFO and CAAPFs 
Jurisdictional Regulations?
    i. When Would EPA Designate These Sources?
    ii. How Will This Proposal Affect States?
    iii. Who Would Issue Permits to These Sources Once Designated?
    4. How Would EPA Revise Regulatory Text?
    B. How Would Silvicultural Activities Be Affected by Today's 
Proposal?
    1. Which Sources Are Currently Excluded From the Definition of a 
``Point Source?'
    2. Are All Discharges From Silvicultural Activities Currently 
Excluded From the NPDES Program?
    3. Which Silvicultural Discharges Would Be Designated Under 
Today's Proposal as Sources Subject to the NPDES Program?
    4. Why is EPA Proposing to Remove the Regulatory Exclusion for 
These Silvicultural Discharges?
    5. When Would Silviculture Sources Be Required to Obtain an 
NPDES Permit?
    6. How Would States Be Affected by This Proposal?
IV. Proposed EPA Authority to Reissue State-Issued Expired and 
Administratively-Continued NPDES Permits
    A. Can EPA Object to State-Issued Expired and Administratively-
Continued Permits?
    B. How Would EPA Review and Object to a State-Issued Expired and 
Administratively-Continued Permit?
    C. When Would EPA Withdraw its Objection?
    D. When Could EPA Invoke This Authority?
    E. Will EPA Work With the States Before Invoking This Authority?
    F. What If a Permit Has Expired but the Permittee Has Not 
Submitted a Timely and Complete Application for Renewal to the 
State?
    G. What Authority Supports Today's Proposed Changes?
    H. Conclusion
V. Regulatory Assessment Requirements
    A. Regulatory Flexibility Act, as amended by the Small Business 
Regulatory Enforcement Fairness Act of 1996
    B. Executive Order 12866
    C. Unfunded Mandates Reform Act
    D. Paperwork Reduction Act
    E. Executive Orders on Federalism
    F. Executive Order 13084: Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children From 
Environmental Health Risks and Safety Risks
    H. National Technology Transfer and Advancement Act
    I. Executive Order 12898: Environmental Justice

B. Potentially Regulated Entities

    Entities discharging pollutants to certain waters of the U.S. could 
be regulated by this rulemaking if they are subject to National 
Pollutant Discharge Elimination System (NPDES) program. Potentially 
regulated entities include:

------------------------------------------------------------------------
                                             Examples of potentially
                Category                        regulated entities
------------------------------------------------------------------------
State, Territorial or authorized Tribal  States, territories and
 Governments.                             authorized Tribes issuing
                                          NPDES permits
Federal Government.....................  EPA
Industry...............................  Industries, including municipal
                                          construction sites,
                                          discharging pollutants to
                                          waters of the U.S.
Municipalities.........................  Owners and operators of
                                          publically-owned treatment
                                          works, municipal separate
                                          storm sewer systems, and
                                          municipal construction and
                                          industrial activities
                                          discharging pollutants to
                                          waters of the U.S.
------------------------------------------------------------------------

    This table is not intended to be exhaustive, but rather provide a 
guide for readers to identify entities that EPA believes could 
potentially be affected by this action. Other types of entities not 
listed in this table could also be regulated. To determine whether your 
facility may be regulated by this proposed action, you should carefully 
examine the applicability criteria in 40 CFR 122.4, 122.23, 122.24, 
122.26, 123.44 and 131.12 of today's proposed rulemaking. If you have 
any questions regarding the applicability of this action to a 
particular entity, consult one of the persons listed in the FOR FURTHER 
INFORMATION CONTACT section.

C. Docket

    The record for this notice has been established under docket number 
W-99-04 and includes supporting documentation. EPA requests that 
commenters submit any references cited in their comments. EPA also 
requests that commenters submitting written comments include an 
original and 3 copies of their written comments and enclosures. 
Commenters that want receipt of their comments acknowledged should 
include a self-addressed, stamped envelope. No facsimiles (faxes) will 
be accepted.
    Electronic comments are encouraged and may be submitted to the 
Water Docket (see ADDRESSES section above). Electronic comments must be 
submitted as an ASCII file or a WordPerfect file. Electronic comments 
must be identified by the docket number, (W-99-04). Comments and data 
will also be accepted on disks in WP8 format or ASCII file format. No 
confidential business information (CBI) should be sent via e-mail.
    For access to docket materials, call EPA's Water Docket at (202) 
260-3027 between 9:00 a.m. and 3:30 p.m. for an appointment. An 
electronic version of this proposal will be available via the Internet 
at: http://www.epa.gov.

I. Purposes and Objectives of Today's Proposed Rules

    Today's proposed rule is intended to clarify and strengthen EPA's 
NPDES and WQS regulations governing discharges into waterbodies that 
are not attaining water quality standards. Today, EPA is separately 
proposing revisions to its Total Maximum Daily Load regulations so that 
TMDLs can more effectively contribute to improving the nation's water 
quality. Today's proposal complements that effort by ensuring that two 
objectives are met. The first objective applies in impaired waterbodies 
prior to the establishment of a TMDL. The purpose of this objective is 
to achieve reasonable further progress toward attaining water quality 
standards. The second objective applies in impaired waterbodies after 
the establishment of a TMDL. The purpose of this objective is to ensure 
more effective implementation of TMDLs.
    To meet the reasonable further progress objective, EPA is adding a 
new antidegradation requirement and revising the NPDES permitting 
regulations to implement that requirement. Today's proposal would 
require all large new dischargers and existing dischargers undergoing a 
significant expansion proposing to discharge the pollutant(s) of 
concern into an impaired waterbody, to offset that new or increased 
discharge. This requirement is in addition to otherwise applicable 
requirements of the CWA and will ensure that there will be reasonable 
further progress toward attaining water quality standards despite the 
addition of the new load from those dischargers. Today's

[[Page 46060]]

proposal also establishes a number of requirements, under the NPDES 
program, to ensure compliance with the antidegradation offset 
requirement. Those requirements include boundaries on when and where 
pollutant load reductions would need to be obtained. Therefore, today's 
proposal will result in reasonable further progress toward attainment 
of water quality standards. In some cases, such progress may even 
result in the attainment of water quality standards so that a TMDL is 
no longer required.
    The Agency notes that this requirement is in addition to existing 
requirements found at 40 CFR 122.44(d)(1)(vii) and 122.4(i). Section 
122.44(d) requires dischargers, where necessary, to receive limits that 
derive from and comply with water quality standards. Section 122.4(i) 
requires that no permit be issued to a new source or a new discharger 
if the discharge will cause or contribute to a violation of water 
quality standards.
    Today, EPA is also proposing to explicitly describe a Regional 
Administrator's authority to trigger existing provisions for reviewing 
and objecting to State-issued NPDES permits. Under the proposal, the 
Regional Administrator will have the discretion, under certain 
circumstances, to trigger these review and objection procedures when a 
State fails to reissue an expired, State-issued permit that has been 
administratively continued for more than 90 days. This proposal is 
designed to address lengthy administrative continuance of permits that 
authorize discharges into impaired waterbodies and which contain limits 
that are insufficient to protect applicable water quality standards. By 
not reissuing these permits, there is a delay in the implementation of 
needed water quality-based effluent limitations. This provision will 
serve both purposes of today's proposal. Prior to the establishment of 
a TMDL, the provision can be used to ensure that more stringent 
effluent limitations which derive from and comply with water quality 
standards are implemented. Subsequent to the establishment of a TMDL, 
this provision will enable the Regional Administrator to ensure that 
existing dischargers receive permit limits consistent with wasteload 
allocations in a TMDL.
    EPA is today proposing additional revisions to the permitting 
regulations to ensure that TMDLs are implemented. These revisions 
include changes to the NPDES jurisdictional regulations regarding 
designation of point sources for regulation under the NPDES permitting 
program. EPA is proposing explicit language describing its authority, 
in States with approved NPDES programs, to designate animal feeding 
operations (AFOs) and aquatic animal production facilities (AAPFs) as 
sources subject to NPDES requirements on a case-by-case basis. EPA is 
also proposing to eliminate the current regulatory exclusion for 
certain discharges from silvicultural activities. These discharges may 
also become subject to NPDES requirements on a case-by-case basis. EPA 
is constraining its discretion to exercise the authority to subject 
these sources to the NPDES program to those circumstances when EPA 
establishes a TMDL for a waterbody and determines that designation is 
necessary to ensure that the wasteload allocations and load allocations 
under the TMDL are achieved. The proposed rule does not place any 
constraint on the discretion of State program Directors, in NPDES 
delegated States, to designate silvicultural activities as point 
sources. EPA recommends however, that States use this authority only on 
a limited basis, in circumstances similar to those in which EPA intends 
to use it (i.e., when there is no other means of providing reasonable 
assurance that a load allocation or wasteload allocation in a TMDL will 
be met).
    Each of today's proposed revisions is designed to achieve the water 
quality goals of the Clean Water Act. EPA believes that today's 
proposal will ensure that those goals are met more quickly and that one 
of the most important tools for achieving those goals, a TMDL, will be 
implemented more effectively.

II. Proposed Requirements for New and Significantly Expanding 
Dischargers Located on Impaired Waters

A. Who Would Be Subject to This Proposal?

    EPA is today proposing to establish new requirements for 
dischargers proposing to add new pollutant loads to an impaired 
waterbody in the absence of a TMDL. These new requirements are located 
in 40 CFR 122.4(j) and 131.12(a)(1)(ii). Section 122.4(j) applies to 
all new dischargers and existing dischargers undergoing a significant 
expansion proposing to add new pollutant loads to a waterbody. Section 
131.12(a)(1)(ii) applies to large new and significantly expanding 
dischargers proposing to add new pollutant loads to an impaired 
waterbody for which EPA has not approved or established a TMDL. EPA is 
also proposing to modify the definitions of a new discharger and an 
existing source under 40 CFR 122.2 and 122.29.
    EPA intends these new requirements to apply only to those 
dischargers who are proposing to add new loads of pollutants to a 
waterbody. Because the current definition of a new discharger can be 
read to include some dischargers who are not adding new loads to a 
waterbody, EPA is proposing to modify the existing definitions of both 
a new discharger and an existing source. The definition of a new 
discharger is currently found at 40 CFR 122.2 and the definition of an 
existing source is currently found at 40 CFR 122.29. EPA is also 
proposing to define the term ``significant expansion.'' All of these 
definitions will be moved to 40 CFR 122.2.
    A new discharger, as currently defined in 40 CFR 122.2, means any 
building, structure, facility, or installation from which there is a 
discharge of pollutants which commenced after August 13, 1979; which is 
not a new source; and has never received a finally effective NPDES 
permit. An existing source, as defined in 40 CFR 122.29, is any source 
which is not a new source or a new discharger. The plain reading of the 
current definition of a new discharger would subject certain sources to 
today's proposed sections (122.4(j) and 131.12(a)(1)(ii), including the 
proposed offset requirements explained below). Under the current 
definition, these sources would be subject to today's proposal even 
though they would not propose to discharge new pollutant loads to a 
waterbody. Such sources include sources that have been and currently 
are discharging pollutants that are not now subject to the NPDES 
program but may in the future become subject to the NPDES program. 
These sources would be subject to the requirements of the NPDES program 
once designated.
    Designation of sources can be made on a case-by-case basis 
involving an individual source. For example, an individual medium-sized 
animal feeding operation (AFO) may be designated as a medium-sized 
concentrated animal feeding operation (CAFO).1 Designation 
can also be made

[[Page 46061]]

by category. For example, sources that will become subject to the NPDES 
program under the Storm Water Phase II rule will be designated on a 
categorical basis.2 Although these sources have been 
discharging before and at the time of designation, they would fall 
within the current definition of a new discharger. As a result, unless 
EPA amends the definitions of a new discharger and an existing source 
for this purpose, these sources would be subject to the proposed 
requirements of 40 CFR122.4(j) and 131.12(a)(1)(ii). As mentioned 
above, EPA intends these sections to apply only to sources proposing to 
discharge new pollutant loads to a waterbody.
---------------------------------------------------------------------------

    \1\ An example of a source that may be designated as a point 
source on an individual basis and which at the time of designation, 
would fall within the current definition of a new discharger, is a 
medium-sized animal feeding operation (AFO) designated as a medium-
sized concentrated animal feeding operation (CAFO). This would be 
the case where that AFO started discharging pollutants after August 
13, 1979. This source is not a new source (there is no applicable 
NSPS yet) and this source has never received a finally effective 
NPDES permit. As an AFO, the source is not subject to the NPDES 
permit program because AFOs are exempt from permit requirements 
under 40 CFR 122.3(e). However, if that source is designated as a 
CAFO (under 40 CFR 122.23) at any time in the future, it would fall 
within the current definition of a new discharger.
    \2\ An example of a source which may become subject to the NPDES 
program as a result of a categorical designation of point sources 
and which would fall within the current definition of a new 
discharger is any Storm Water Phase II source that currently is and 
has been discharging pollutants at any point after August 13, 1979. 
These sources are not new sources (there is no applicable NSPS) and 
these sources have never received a finally effective NPDES permit.
---------------------------------------------------------------------------

1. Which Sources Discharge New Pollutant Loads to a Waterbody?
    Sources that are proposing to discharge new pollutant loads to a 
waterbody are dischargers that have not yet begun discharging but are 
proposing to discharge. Also discharging new pollutant loads are those 
dischargers that have been discharging to one waterbody and, for 
example, propose to move their outfall to another location not within 
the ``same body of water.'' Existing dischargers that expand or 
increase their loads, discharge new pollutant loads to a waterbody as 
well.
    For proposed 40 CFR122.4(j) and 131.12(a)(1)(ii) to apply only to 
dischargers that propose to discharge new pollutant loads to a 
waterbody, EPA is proposing to modify the definition of a new 
discharger. In addition, EPA is proposing to delete the current 
definition of an existing source at 40 CFR 122.29 and replace it with a 
new term, ``existing discharger,'' which will be defined in 40 CFR 
122.2. EPA believes that consolidating these definitions into one 
section provides greater clarity. The proposed modifications would 
result in dischargers that fall into two classes, those that are 
currently discharging to the same body of water (or existing 
dischargers) and those that are not now discharging but wish to 
discharge in the future (or new dischargers). For purposes of 40 CFR 
122.4(j) and 131.12(a)(1)(ii), however, although dischargers would be 
classified as either ``new dischargers'' or ``existing dischargers,'' a 
new discharger may also be a new source and an existing discharger may 
also be a new source.3
---------------------------------------------------------------------------

    \3\ The definition of a new source remains unchanged. A new 
source is a source which began construction after the promulgation 
of applicable new source performance standards (NSPS). Under this 
unchanged definition of a new source, existing dischargers and new 
dischargers (under this proposal) can be new sources subject to 
NSPS. For example, if a discharger is a new discharger under this 
proposal and that discharger began construction after the 
promulgation of applicable NSPS, then that discharger would also be 
a new source (subject to NSPS). Likewise, if a discharger is an 
existing discharger under this proposal and that discharger began 
construction after the promulgation of applicable NSPS, then that 
discharger would also be a new source (subject to NSPS). If there 
are no applicable NSPS for either discharger, then neither would be 
a new source.
---------------------------------------------------------------------------

2. Would Dischargers Who Are Currently Discharging but Move Their 
Outfall(s) to Another Waterbody Be Subject to This Proposal?
    Some dischargers move their outfalls from one waterbody to another 
waterbody. In order to protect impaired waterbodies, EPA believes it is 
appropriate to subject these dischargers to the new requirements 
reflected in today's proposal. This is consistent with the Agency's 
intent to subject sources introducing new pollutant loads to a 
waterbody to today's new requirements. An outfall would not be subject 
to today's new requirements if it was moved within the ``same body of 
water'' as the existing outfall location. In determining whether the 
outfall is moved within the ``same body of water'' as its original 
location, the permitting authority should consider whether: (1) The 
background concentration of the pollutant in the receiving water 
(excluding any amount of the pollutant in the facility's discharge) is 
similar at and between both outfall points; (2) there is a direct 
hydrological connection between outfall points; and (3) water quality 
characteristics (e.g., temperature, Ph, hardness) are similar at and 
between both outfall points. Dischargers who move an outfall(s) within 
the same body of water would remain existing dischargers.
    The proposed modifications to the definitions of a new discharger 
and an existing source will capture these sources as sources that would 
be subject to proposed 40 CFR 122.4(j) and 131.12(a)(1)(ii).
    3. Will the Proposed Changes to the Definitions of a New Discharger 
and an Existing Source Affect Their Application Elsewhere in the 
Regulations?
    In modifying the definition of a new discharger, deleting the 
definition of an existing source and proposing a definition for a new 
term, an existing discharger, EPA does not intend to affect any other 
existing regulations or effluent guidelines, including EPA's permit 
decisionmaking regulations. Under 40 CFR 124.16 and 124.60 of EPA's 
permit decisionmaking procedures, a ``new discharger,'' whose permit is 
the subject of a pending administrative appeal, is without a permit 
until the appeal process has concluded and the Agency's action has 
become final. On the other hand, an existing facility, whose permit is 
the subject of a pending administrative appeal, is not without a permit 
until the appeal process has concluded. The uncontested terms of an 
existing facility's permit take effect pending the conclusion of an 
administrative appeal. Although today's proposal would change the 
definitions of a new discharger and an existing source, EPA does not 
intend to change the application of 40 CFR 124.16 or 124.60 at this 
time. Accordingly, a discharger who, under the existing definitions, is 
a ``new discharger'' and who, under the definitions in today's 
proposal, would be an ``existing discharger,'' would be treated as a 
``new discharger'' for purposes of 40 CFR 124.16 and 124.60. That is, a 
discharger who would become an ``existing discharger'' by virtue of the 
changes in today's proposal, would still be without a permit pending 
the conclusion of an administrative appeal of the discharger's permit. 
EPA believes that this interpretation of 40 CFR 124.16 and 124.60 makes 
sense because dischargers who become ``existing dischargers'' by virtue 
of the changed definitions proposed today would not have been operating 
under an existing permit (this class of dischargers are those that are 
discharging and not subject to NPDES regulation (discharging legally 
without a permit) but are designated as sources subject to NPDES 
regulation at some point in the future). EPA has long required that 
those who wish to contest permit terms do so on their own time. 43 FR 
37,087 (Aug. 21, 1978). This principle is especially compelling when 
the Agency has never acted to approve the discharge on any set of terms 
or conditions.
    EPA believes that an amendment to 40 CFR part 124 would clarify how 
EPA intends the stay provisions in 40 CFR 124.16 and 124.60 to apply to 
``existing dischargers''; however, EPA has not included revised 
language in today's proposal because the Agency has,

[[Page 46062]]

elsewhere, proposed changes to 40 CFR 124.16 and 124.60 which have not 
yet been finalized. 61 FR 65,268 (Dec. 11, 1996)(Amendment to 
Streamline the National Pollutant Discharge Elimination System Program 
Regulations: Round 2). EPA proposes to amend 40 CFR 124.16 and 124.60 
in a way that more clearly reflects its understanding of their 
applicability to ``existing dischargers'' and which will conform to the 
revisions made to these provisions in the Round 2 NPDES Streamlining 
Rule once the contours of those revisions have become final. EPA 
solicits comment on whether or not a new discharger that would become 
an existing discharger under the definitions in today's proposal should 
be treated as an existing discharger for purposes of 40 CFR 124.16 and 
124.60.
    EPA also invites comment on whether the modifications to these 
definitions will have an effect on their application elsewhere in the 
NPDES regulations. EPA may amend the respective sections so that these 
definitional changes do not affect those sections.
4. Would Any Existing Dischargers Be Subject to This Proposal?
    EPA has consistently believed that the mere fact that an existing 
discharger currently discharges does not give them the privilege to 
discharge any amount of additional loads without consequence. 
Therefore, EPA is also proposing to subject existing dischargers 
undergoing a significant expansion to proposed 40 CFR 122.4(j) and 
131.12(a)(1)(ii). The term ``significant expansion'' will be newly 
defined in 40 CFR 122.2.
5. How Is EPA Proposing To Define What Constitutes a ``Significant 
Expansion'' of an Existing Discharger?
    EPA is proposing to define the term ``significant expansion'' to 
mean a twenty percent or greater increase in loadings above the 
discharger's current permit limit. Twenty percent is consistent with 
EPA's ``Guidance Manual for the Use of Production-Based Pretreatment 
Standards and the Combined Wastestream Formula,'' September 19, 1985. 
There, the Agency stated that an industrial user (IU) is required to 
notify the Control Authority immediately where the IU's average 
production and flow rate data have ``significantly'' changed. The 
guidance further explains that as a general rule, the average rate is 
considered to have changed significantly if the change is greater than 
twenty percent. Where there is a significant change in these rates, it 
is suggested that the Control Authority reevaluate the limits in the 
IU's permit. In the preamble to the revision to the General 
Pretreatment Regulations for Existing and New sources, FR 40562, 40565, 
October 17, 1988, EPA confirmed the use of twenty percent as the level 
at which an average rate is considered to have changed significantly. 
The Agency stated that ``for purposes of today's rule, any increase or 
decrease in production (or flow) rates will generally be deemed 
significant if the change is equal to or greater than twenty percent of 
the long term average production (or flow) rate at the facility.'' 
Therefore, in order to maintain consistency with its current guidance, 
EPA is proposing a twenty percent increase in loadings above the 
discharger's current permit limit as the threshold level which defines 
a significant expansion.
    The Agency believes however, that using an increase in ``loadings'' 
rather than ``production or flow rates'' is more appropriate. Today's 
proposal is applicable to dischargers proposing to discharge new 
pollutant loads into a waterbody and there may be cases where an 
increase in production rates may not result in a corresponding increase 
in pollutant loads. EPA invites comment on the appropriateness of a 
twenty percent increase in loadings above the discharger's current 
permit limit as the threshold level which defines a significant 
expansion.
    EPA is also considering the use of a fifty rather than a twenty 
percent increase in loadings above the discharger's current permit 
limit as the threshold level to define a ``significant expansion.'' A 
threshold level of fifty percent is consistent with other Agency 
guidance. On December 18, 1984, EPA put out guidance on the 
``Calculation of Production-Based Effluent Limits'' (Memorandum from J. 
William Jordan to Regional Branch Chiefs). The purpose of the guidance 
was to clarify the procedure for calculating production-based effluent 
limitations and to provide guidance on the use of alternate 
limitations.
    Effluent limitations guidelines are often derived from production 
rates and are set at levels which include some variations in 
production. However, certain facilities may have large random or cyclic 
fluctuations in production rates where it would be appropriate to have 
alternative effluent limitations which are applicable at some increased 
production rate. The guidance mentioned above suggests that if 
production rates are expected to change ``significantly'' during the 
life of the permit, the permit should include alternate limits. The 
guidance identifies that it is generally agreed that a ten to twenty 
percent fluctuation in production is within the range of normal 
variability and thus, would not need alternate limits. Further, it 
states that changes in production rates which are substantially higher, 
``such as fifty percent,'' would warrant the consideration of alternate 
limits. EPA seeks comment on whether a fifty percent increase in 
loadings above the discharger's current permit limits should be used to 
define a significant expansion.
    Other statutes and regulations also establish thresholds over which 
a source cannot change without incurring different requirements. The 
Resource Conservation and Recovery Act (RCRA) permit regulations hold 
that ``reconstruction'' occurs when capital investment in the changes 
to the facility exceed fifty percent of the capital cost of a 
comparable entirely new hazardous waste management facility. 40 CFR 
270.72(b). An interim status facility (a facility that is in existence 
on the effective date of statutory or regulatory amendments that render 
the facility subject to the requirement to have a RCRA permit), is 
treated as having been issued a permit and may make changes short of 
reconstruction, but cannot make changes amounting to reconstruction 
until the facility receives a permit.
    Under the Clean Air Act, new source review applies to new major 
sources and modifications to existing major sources. 42 U.S.C. 7411. A 
modification of an existing major source triggers review if it is a 
physical or operational change that increases emissions by a 
``significant'' amount. By regulation, EPA has defined ``significant'' 
based on the pollutant emitted. 40 CFR 51.165.
    EPA invites comment on whether a threshold level other than twenty 
or fifty percent should trigger the applicability of 40 CFR 122.4(j) 
and 131.12(a)(1)(ii). One option would be to allow the permitting 
authority to determine what constitutes a significant expansion on a 
case-by-case basis, without establishing a specific threshold level.
    The Agency notes that where an existing discharger undergoes a 
``significant expansion,'' only the expanded portion of the discharge 
(the new loadings) would be subject to the offset requirements under 40 
CFR 131.12(a)(1)(ii). For existing dischargers with a current permitted 
load, the definition of a significant expansion and the amount for 
which offsets are required would be based on the increase in the 
permitted load.
    Based on an initial analysis of potentially affected sources, EPA 
believes that the cost to dischargers of using a threshold of twenty 
percent to

[[Page 46063]]

define a significant expansion would not be significantly greater than 
the cost of using a threshold of 50 percent. EPA requests comment on 
this initial conclusion and any supporting data commenters can provide.
    EPA also invites comment on how to measure a significant expansion 
and to calculate the corresponding offset requirements for those 
dischargers who increase the loadings of a pollutant for which the 
waterbody is impaired but for which there is no current permitted load 
(there is no effluent limit for that particular pollutant in the 
discharger's permit). It is EPA's intent that the offset requirements 
apply to new pollutant loads and in the case of an existing discharger, 
``significant'' new pollutant loads.

B. What Are the Proposed Changes to the Federal Antidegradation Policy?

    EPA is proposing to amend 40 CFR 131.12(a) to require a new 
discharger, or an existing discharger undergoing a significant 
expansion, proposing to discharge to a waterbody not attaining water 
quality standards, the pollutant(s) causing the nonattainment, to 
achieve reasonable further progress toward attaining water quality 
standards. This requirement, in addition to otherwise applicable 
requirements of the CWA, would apply where there is no EPA approved or 
established Total Maximum Daily Load (TMDL). When EPA has approved or 
established a TMDL, a new discharger proposing to discharge the 
pollutant(s) for which the TMDL was established, may discharge only in 
accordance with that TMDL or a revised, approved TMDL. It would apply 
only to new dischargers and existing dischargers undergoing a 
significant expansion that are not a small business or entity as 
defined in 5 U.S.C. 601(6). Therefore, a new discharger or existing 
discharger undergoing a significant expansion which is not a small 
business or entity, would need to comply with a permit limit that 
derives from and complies with water quality standards and this new 
requirement for reasonable further progress. With this proposed change, 
EPA intends to ensure reasonable further progress toward restoring 
water quality standards in impaired waters prior to the completion of 
TMDLs. EPA emphasizes that this is an interim approach to attaining 
water quality standards; these requirements apply only until the TMDL 
is approved or established by EPA, and the TMDL is implemented with 
respect to the discharger subject to these requirements.
1. What Is the Current Federal Antidegradation Policy?
    Section 303(c) of the CWA establishes the basis for federal water 
quality standards. EPA regulations implementing section 303(c) are 
published at 40 CFR part 131. Under these rules, the minimum elements 
that must be included in a State's water quality standards include: use 
designations for all waterbodies in the State, water quality criteria 
sufficient to protect those use designations, and an antidegradation 
policy. See 40 CFR 131.6. States may also include in their standards, 
policies generally affecting the standards' application and 
implementation. See 40 CFR 131.13. These policies are subject to EPA 
review and approval.
    The current federal antidegradation policy performs an essential 
function in protecting and maintaining water quality. Designated uses 
establish the water quality goals for the waterbody, water quality 
criteria define the minimum conditions necessary to achieve those goals 
and the antidegradation policy specifies the framework to be used in 
making decisions regarding changes in water quality. The intent of an 
antidegradation policy is to ensure that in all cases, at a minimum: 
(1) Water quality necessary to support existing uses is maintained 
(Tier 1); (2) that where water quality is better than the minimum level 
necessary to support protection and propagation of fish, shellfish and 
wildlife, and recreation in and on the water (``fishable/swimmable''), 
that water quality is also maintained and protected unless, through a 
public process, some lowering of water quality is deemed to be 
necessary to allow important economic or social development to occur 
(Tier 2); and (3) where waterbodies are of exceptional recreational or 
ecological significance, water quality is maintained and protected 
(Tier 3). Antidegradation plays a critical role in allowing States and 
Tribes to maintain and protect the finite public resource of clean 
water and ensure that decisions to allow reductions in water quality 
are made in a public manner and serve the public good. States and 
authorized Tribes are required to adopt antidegradation policies at 
least as stringent as the federal antidegradation policy.
    Section 131.12(a) of the antidegradation policy, contained in the 
federal water quality standards regulation, requires that existing uses 
and the water quality necessary to protect them be maintained and 
protected. This provision, in effect, establishes the floor of water 
quality for all waters of the U.S., and that all waters of the U.S. are 
subject to Tier 1 protection. In general, waters that are subject only 
to Tier 1 antidegradation policies are those waterbodies that do not 
exceed the CWA section 101(a) goals. These waters either do not have 
any remaining assimilative capacity to receive additional loads of 
pollutants without causing the loss of the existing use or the water 
quality already is degraded below that necessary to maintain an 
existing use. ``Existing uses'' are defined at 40 CFR 131.3(c) as those 
uses actually attained in the waterbody on or after November 28, 1975, 
whether or not they are included in the water quality standards. 
Antidegradation policies are generally implemented for Tier 1 by 
reviewing and determining whether a discharge would impair an existing 
use. Tier 1 currently requires that water quality necessary to protect 
existing uses shall be maintained and protected. In addition, the State 
or Tribe should ensure that all existing uses are designated in 
accordance with 40 CFR 131.10(i).
2. What Were the Recommendations of the TMDL Federal Advisory 
Committee?
    The Federal Advisory Committee on the Total Maximum Daily Load 
Program recommended a number of ways to improve the effectiveness and 
efficiency of EPA, State, Territorial and Tribal programs under section 
303(d) of the CWA. These recommendations address many of the TMDL 
program's complex technical and policy issues, and include 
recommendations on several new policy and program directions. In 
particular, the Committee recognized that there could be a considerable 
time lag between the initial listing of a waterbody on a section 303(d) 
list of impaired or threatened waters and the actual completion, 
approval and implementation of the TMDL. Some on the Committee noted 
that water quality should not be allowed to further degrade during that 
time period. The Committee recommended that EPA actively encourage and 
support stakeholders stabilizing and enhancing water quality before a 
TMDL is in place (Committee Report at page 17). The Committee noted 
that the most successful stakeholder efforts would lead to the full 
restoration of water quality and attainment of water quality standards 
and ultimately the water's removal from the section 303(d) list before 
a TMDL is developed. The Committee recommended an optional 
stabilization plan that would identify mechanisms that might allow for

[[Page 46064]]

exceptions from point source discharge restrictions upon demonstration 
that the optional stabilization plan results in parameter specific net 
progress in water quality through means other than those restrictions.
    EPA believes that further degradation of already impaired 
waterbodies must be prevented and also recognizes the need for progress 
toward attaining water quality standards in this interim period. 
Therefore, EPA believes that by creating a new requirement under the 
federal antidegradation policy as reflected in today's proposal, not 
only will further degradation of water quality be prevented, but 
reasonable further progress towards restoring water quality standards 
will be achieved.
3. What Revisions Is EPA Proposing Today?
    i. Why Is EPA Proposing to Require Dischargers Subject to This 
Proposal to Achieve Reasonable Further Progress Toward Attaining Water 
Quality Standards?
    Water quality standards serve as the foundation for the water-
quality based approach to pollution control and are a fundamental 
component of watershed protection. Under the Clean Water Act, States, 
Territories and authorized Tribes adopt water quality standards to 
protect public health or welfare, enhance the quality of the nation's 
water and serve the purposes of the Act. A primary objective of the Act 
is to ``restore and maintain the chemical, physical and biological 
integrity of the Nation's waters.'' CWA section 101(a). To date, EPA's 
implementing regulations at 40 CFR 131 have addressed the mandate for 
restoring the nation's waters through the specification of designated 
uses. Designated uses are defined as those uses specified for each 
waterbody or segment, whether or not those uses are being attained. 
Designated uses focus on the attainable condition of the waterbody, in 
contrast to existing uses which focus on the past or present condition 
of the waterbody. It is through the designation of uses that the 
environmental goals for specific waterbodies are established. States, 
Territories and authorized Tribes have the flexibility to establish 
goals for waters that require improvements in water quality, thus 
establishing a requirement for restoration. Today's proposal 
supplements the restoration provisions of the current regulations. By 
establishing the requirement for reasonable further progress as a 
component of the federal antidegradation policy, EPA believes the 
objectives of the Act will be advanced.
    Prior to today's proposal, Tier 1 of the federal antidegradation 
policy has been aimed at protecting and maintaining existing uses of 
waterbodies. EPA believes extending the protection of existing uses to 
include a provision aimed at promoting reasonable further progress 
toward restoring water quality in impaired waterbodies is both 
consistent with the goals of the Act, and is a logical means for 
meeting those goals.
    The Agency's policy choice is supported by the Act's legislative 
history. The Senate Report states:

    In those waterbodies which are not pristine, it should be the 
national policy to take those steps which will result in change 
toward the pristine state in which the physical, chemical and 
biological integrity of the waterbody can be said to exist. Striving 
toward, and maintaining the pristine state is an objective which 
minimizes the burden to man in maintaining a healthy environment, 
and which will provide for a stable biosphere that is essential to 
the well-being of human society. S. Rep. No. 92-414, 92d Cong. 1st. 
Sess. at 76-77 (1971).

Establishing a requirement for reasonable further progress will result 
in improvements in water quality and progress toward attaining water 
quality standards, pending the establishment, approval and 
implementation of the TMDL.
    Today, EPA is proposing to require large new and significantly 
expanding dischargers proposing to discharge to nonattained waterbodies 
to achieve reasonable further progress toward attaining water quality 
standards before discharging additional loadings of the pollutant 
causing the nonattainment. In effect, certain dischargers will be 
required to show net progress toward improving water quality as a 
condition of being authorized to discharge to a nonattained waterbody. 
EPA believes this proposal is consistent with the recommendations of 
the Federal Advisory Committee on the Total Maximum Daily Load Program, 
and the approach chosen by the Agency when faced with the need to 
address a similar problem under the Clean Air Act.
    a. How Does This Relate to the TMDL Federal Advisory Committee's 
Recommendations?
    As noted above, the Committee recommended that EPA actively 
encourage and support stakeholders stabilizing and enhancing water 
quality before a TMDL is in place. While EPA is not adopting all of the 
Committee's recommendations, the Agency believes that progress toward 
the section 101(a) goals of the Act should occur before allowing some 
new and significantly expanding dischargers to add new loads of the 
pollutant causing the nonattainment to an impaired waterbody.
    b. Has This Approach Been Used in Other Statutes?
    Just as the Clean Water Act establishes the goal to ``* * * restore 
and maintain the chemical, physical and biological integrity of the 
Nation's waters,'' the Clean Air Act declares its purpose is ``to 
protect and enhance the quality of the Nation's air resources so as to 
promote the public health and welfare and the productive capacity of 
its population.'' CAA section101(b)(1). Given these similar goals, the 
actions and reasoning of the Agency and Congress in dealing with areas 
which are not meeting air quality standards can serve to guide EPA's 
policy choices when dealing with waterbodies which are not attaining 
water quality standards.
    In 1970, the Clean Air Act required generally, that State programs 
had to ensure that new sources did not interfere with the attainment of 
national ambient air quality standards (NAAQS). In 1976, EPA issued an 
interpretive ruling on the preconstruction review requirements for 
major new stationary sources proposing to locate in an area that 
exceeded a NAAQS. Given a standard and an area not in attainment with a 
standard, the Agency believed that it was reasonable to allow a new 
addition of the pollutant causing the nonattainment only if the new 
source ensured that reasonable progress was made toward meeting that 
standard. 41 FR 55524. Congress agreed that EPA's requirement was 
reasonable. As a result, Congress clarified in the Clean Air Act 
Amendments of 1977 that, in general, a new permit to construct and 
operate a new major stationary source or a major modification to an 
existing source proposing to emit the pollutant of concern in a 
nonattainment area may only be issued if reasonable further progress 
toward attainment of the NAAQS was made and the source met the most 
stringent emissions limits. CAA section 173.
    Given the similar statutory goals and the similar circumstances, 
EPA again believes it would be reasonable to require new and 
significantly expanding existing dischargers proposing to discharge 
additional loads of the pollutant(s) causing the nonattainment of water 
quality standards to ensure that progress is made toward attainment of 
the standards in the future. EPA believes that establishing a similar 
requirement for reasonable further progress as a component of the 
federal antidegradation policy is the best way to meet the goals of the 
Clean Water Act

[[Page 46065]]

when faced with new and significantly expanding existing dischargers 
wishing to locate on impaired waterbodies.
    EPA invites comments on this proposed change to Tier 1 of the 
federal antidegradation policy. EPA also invites comment on whether 
some other approach could serve as an appropriate means to ensure 
reasonable further progress toward restoring water quality standards in 
the interim period between listing of waterbodies under CWA section 
303(d), and the establishment, approval and implementation of the TMDL.
    ii. How is EPA Proposing to Define Reasonable Further Progress?
    As stated above, EPA is proposing to require reasonable further 
progress as a means of achieving the objectives of the Clean Water Act. 
EPA is also today proposing a definition of reasonable further progress 
for some new and existing dischargers. EPA believes reasonable further 
progress is best achieved by offsetting any new loading of the 
pollutant of concern to an impaired waterbody by reducing loads of the 
same pollutant from existing sources located on the same waterbody. EPA 
further believes that an offset of at least one and a half to one is 
generally appropriate as means of ensuring reasonable further progress. 
Offsets are not only the most feasible means to achieve reasonable 
further progress for new and significantly expanding dischargers, they 
are a logical means to actually achieve such progress. Further, they 
are a means the Agency has chosen in similar circumstances.
    EPA is thus proposing that, in general, pollutant load reductions 
must be one and a half times the new loads of the pollutant to the 
waterbody (see discussion below). Under such a requirement, reasonable 
further progress toward meeting the applicable water quality standard 
would be achieved because the total load of the pollutant to the 
waterbody is reduced. An added benefit of requiring offsets as the 
means for achieving reasonable further progress is that the requirement 
creates an incentive for pollution prevention. A discharger subject to 
the requirement can reduce the burden of finding sufficient offsets by 
reducing the amount of pollutant(s) the discharger is proposing to add 
to the impaired waterbody.
    EPA also believes that this proposed requirement will serve as a 
catalyst for the establishment of a trading market between large new 
dischargers and existing dischargers undergoing a significant 
expansion, and existing point source dischargers or nonpoint sources. 
(See discussion below). EPA believes that the establishment of a 
trading market will give dischargers more options to achieve any future 
permit limits required by TMDLs more efficiently.
    a. Has Reasonable Further Progress Been Defined Under Other 
Statutes?
    In 1977, Congress amended the Clean Air Act and adopted the general 
requirements for a new permit to construct and operate a new major 
stationary source or a major modification to an existing source 
proposing to emit the pollutant of concern in a nonattainment area. 
Such permits may be issued if, by the time the source begins operating, 
sufficient offsetting emissions reductions have been attained such that 
the total emissions in the area will be sufficiently less than the 
emissions from existing sources prior to the application for a new 
permit so as to represent reasonable further progress. CAA section 173. 
The term ``reasonable further progress'' was defined as ``such annual 
incremental reductions in emissions of the relevant air pollutant as 
are required by this part or may be reasonably required by the 
Administrator for the purpose of ensuring attainment of the applicable 
national ambient air quality standards by the applicable date.'' CAA 
section 171(1). Congress adopted this new provision ``to allow 
reasonable economic growth to continue in an area while making 
reasonable further progress to assure attainment of the standards by a 
fixed date. * * *'' 95 Cong. House Report 294 at *211.
    EPA believes that the Agency's experiences under the Clean Air Act 
serve as a useful guide for its policy choices with respect to 
treatment of new loads of pollutants to impaired waterbodies under the 
Clean Water Act. EPA's proposals today are, therefore, similarly 
designed to allow continued growth in areas which are not meeting water 
quality standards while ensuring that progress toward meeting water 
quality standards is not halted or reversed.
    iii. What Offsets Would Affected Dischargers Need to Obtain to 
Ensure Reasonable Further Progress?
    EPA is proposing to require that large new and significantly 
expanding dischargers obtain and maintain offsets, i.e., pollutant load 
reductions, in general, in the amount of one and a half to one. In 
other words, these dischargers would need to obtain and maintain an 
offset of least of one and a half times the amount of the new or 
additional pollutant loadings they are proposing to discharge. The 
specific requirements for an individual discharger would be dependent 
upon the type of pollutant for which the waterbody is impaired (which 
is also the pollutant the discharger is proposing to discharge), the 
source from which the discharger is proposing to obtain and maintain 
the offsetting load reductions, and the large new or significantly 
expanding discharger itself. In addition, EPA is proposing specific 
permitting requirements to implement this offset requirement. (See 
discussion below).
    In considering the amount by which a proposed discharge should be 
offset, EPA considered the burdens associated with achieving the 
necessary pollutant load reductions. Based upon the Agency's analysis 
of the costs, discussed below in section VI. A, EPA believes that in 
most cases an offset in the amount of one and a half times the proposed 
discharge is both reasonable and achievable.
    a. Could Offsets Be Obtained From Existing Nonpoint Sources?
    EPA believes further that this proposed requirement will result in 
load reductions from sources that EPA and States authorized to 
administer the NPDES program can not regulate under the NPDES program. 
Under today's proposal, large new or significantly expanding 
dischargers would need to obtain and maintain pollutant load reductions 
to compensate for their proposed increases in pollutant loads. These 
reductions would need to be obtained from existing point source 
discharger(s) or nonpoint sources located on the same waterbody as the 
discharge from the new discharger or existing discharger undergoing a 
significant expansion. EPA believes the ability to obtain offsets from 
nonpoint sources, in addition to point source dischargers, is a crucial 
element in ensuring reasonable further progress toward restoring water 
quality pending the completion of a TMDL. Nonpoint sources, in some 
areas, are significant contributors of pollutants to waters of the 
United States, and high pollutant levels persist in many waterbodies. 
Furthermore, in many cases it is more cost effective to obtain 
significant reductions from non-point sources than to impose more 
stringent limitations on point sources.
    b. Could the Director Vary the Amount of the Offset?
    Today's proposal generally requires that the amount of the proposed 
discharge be offset by pollutant load reductions of one and a half 
times the increase in mass loadings. The amount of the offset however, 
could be varied, at the discretion of the Director. The Director may 
determine that an offset greater than one and a half times the proposed 
discharge is necessary in order

[[Page 46066]]

to ensure reasonable further progress toward restoring water quality 
standards. The Director may also determine that an offset less than one 
and a half times, but at least more than, the amount of the proposed 
discharge will ensure reasonable further progress. Each of these cases 
is discussed below.
    EPA recognizes the potential for a significant amount of 
uncertainty in both obtaining and maintaining the pollutant load 
reductions, depending on the source of the reductions. For example, if 
the discharger enters into an agreement with an existing point source, 
the discharger would be presumed to have an offset requirement of one 
and a half times the amount of the proposed discharge. However, when 
entering into an agreement with a nonpoint source, it may be somewhat 
more difficult to determine exactly how much reduction will be achieved 
and whether the reductions would be maintained over time, due to the 
uncertainties regarding the effects of management practices designed to 
reduce loads from nonpoint sources. In addition, since nonpoint sources 
are not subject to an NPDES permit, the permitting authority may have 
less ability to ensure that offsets are implemented and maintained. EPA 
notes however that many States have additional authorities beyond those 
specified in the CWA, to implement load reductions from nonpoint 
sources.
    The location of the offsetting source(s) within the impaired 
waterbody may also impact the potential for achieving reasonable 
further progress in attaining water quality standards. If the source(s) 
of the offsetting pollutant load reductions are located at the margins 
of the impaired waterbody, the overall impact of the pollutant load 
reductions in terms of attaining water quality standards is more 
difficult to determine. In such cases, the Director may require that a 
greater amount of reductions must be realized and require an offset 
greater than one and a half to one. Specifically, the final offset may 
be determined by factors such as how great a pollutant load reduction 
the offsetting source(s) would actually be able to realize; the 
likelihood that the offsetting source(s) will be able to maintain the 
offset; and the location of the offsetting source(s) within the 
impaired waterbody.
    EPA believes allowing the Director the discretion to require an 
offset greater than one and a half times the amount the discharger is 
proposing to discharge is appropriate in order to compensate for 
uncertainties associated with obtaining load reductions from offsetting 
sources. EPA also believes this discretion is appropriate to account 
for other factors which may include the type of pollutant and the 
degree of impairment of the waterbody.
    EPA also recognizes that situations may exist where offsets of one 
and a half times the proposed discharge are difficult to obtain, such 
that an offset of less than one and a half to one (but greater than one 
to one) may satisfy the requirement for reasonable further progress. 
For example, there may only be a few other sources of the pollutant 
causing the impairment, the other sources may discharge a very limited 
amount of the pollutant, or it may be very costly to control the 
discharge. While EPA believes these situations are limited in number, 
allowing the Director the discretion to require an offset less than one 
and a half times the proposed discharge but at least more than the 
amount of the proposed discharge will still ensure reasonable further 
progress toward restoring water quality standards in the interim.
    To assure appropriate implementation of the offset provisions by 
authorized State permitting authorities, EPA would implement its 
oversight role though the permit objection provisions of CWA section 
402(d) (The Agency proposes changes to the permit objection regulations 
elsewhere in today's notice. Those changes involve EPA's authority to 
object to expired and administratively-continued permits). Under CWA 
section 402(d), EPA may object to the issuance of an NPDES permit by an 
authorized State if the permit would be outside the guidelines and 
requirements of the Act. If the issuance of a State NPDES permit to a 
source required to obtain an offset would not result in reasonable 
further progress toward attainment of water quality standards, EPA 
could object to such a permit.
    EPA envisions two instances when an objection might be warranted: 
specifically, when the State Director would propose to issue a permit 
with an offset less than 1.5 and, as discussed further on in today's 
notice, when the State Director would waive the offset provision 
concluding that the offset would result in further degradation of water 
quality. The 1.5 offset criterion is not absolute and the Director has 
discretion to require a lesser offset. The exercise of that discretion, 
however, would still need to ensure reasonable further progress toward 
attainment of water quality standards. If a lesser offset would not 
ensure reasonable further progress, today's proposal would maintain the 
Agency's authority to object to the issuance of the permit.
    Today's notice does not propose changes to the regulatory text 
describing the Regional Administrator's grounds for permit objections 
because the Agency believes the existing regulations would provide the 
bases for such objections. If the Agency were to object to a State 
permit for failure to ensure reasonable further progress, the objection 
would be based on 40 CFR 123.44(c)(1), (3), (4), (7) and/or (8). 
Subsection (c)(1) refers to a permit that fails to apply or ensure 
compliance with any applicable requirement of 40 CFR part 123. Though 
the 1.5 offset criterion would not be a requirement, today's proposal 
would require offsets that ensure reasonable further progress. If an 
offset less than 1.5 would not ensure reasonable further progress, the 
permit would fail to apply a requirement of 40 CFR part 123 (section 
123.25 specifies the NPDES permitting requirements in 40 CFR part 122 
that apply to State NPDES programs, including 40 CFR 122.4). Subsection 
(c)(3) refers to a permit issued using procedures that fail to comply 
with procedures required by the CWA, implementing regulations, or by 
the Memorandum of Agreement. If a State did not adequately explain why 
an offset less than 1.5 would ensure reasonable further progress, the 
issuance of such a permit would not comply with applicable procedural 
requirements. Subsection (c)(4) refers to a permit that misinterprets 
the CWA or any guidelines or regulations or misapplies them to the 
facts. Issuance of a State permit that would not ensure reasonable 
further progress would misinterpret the CWA or misapply applicable 
requirements. Subsection (c)(7) restates the statutory standard that 
the issuance of the proposed permit could not be outside the 
requirements of the CWA or implementing regulations. Finally, 
subsection (c)(8) refers to the effluent limits of a permit that fails 
to satisfy the requirements of 40 CFR 122.44(d) (section 122.44(d) 
requires that effluent limits achieve water quality standards). The 
issuance of any permit to a source required to obtain an offset would 
not satisfy the requirements of 40 CFR 122.44(d) if the permit would 
not ensure reasonable further progress toward attainment of water 
quality standards.
    While the Agency believes that changes to regulatory text are 
unnecessary, EPA invites comment on whether to include an explicit 
basis for objection in any final rule. The purpose of any explicit 
regulatory text would be to clarify that the Agency could object to the 
issuance of a State permit to a source required to obtain an offset if 
the issuance would not ensure reasonable further progress toward 
attainment of water quality standards.
    EPA also recognizes there may be limited circumstances where 
requiring

[[Page 46067]]

offsets will result in further degradation of water quality, and loss 
of an existing use. Therefore, EPA is proposing that the Director also 
have the discretion to not require an offset, if it is determined that 
any offset would result in further degradation of water quality. Such 
degradation may occur, for example, when the sole NPDES discharger, 
with a low volume but high concentration of a pollutant such as 
phosphorus, discharges to an ephemeral or low flow waterbody which is 
currently not attaining the water quality criteria for phosphorus and 
where the only other sources of phosphorus are from irrigation return 
flows. If the sole discharger negotiates a reduction of irrigation 
return flows to offset its phosphorus loads, it may result in increased 
ambient phosphorus concentrations due to the loss of volume in the 
waterbody, and further degradation of water quality. In circumstances 
such as these, although limited and infrequent, EPA believes the 
Director should have the discretion to waive the requirement for any 
offset in order to prevent further degradation of water quality and the 
loss of an existing use. For the reasons described earlier, the Agency 
also proposes to retain authority to object to the issuance of a State 
permit for a source required to obtain an offset if the State Director 
inappropriately waived the offset requirement concluding that the 
offset would result in further degradation of water quality.
    Finally, the new provision at 40 CFR 131.12(a) proposes that 
reasonable further progress for large new dischargers and existing 
dischargers undergoing a significant expansion means, at a minimum, an 
offset greater than the amount of the proposed discharge. The proposed 
regulation, therefore, provides the permitting authority with the 
discretion to require additional measures to attain reasonable further 
progress. The permitting authority may choose to exercise this 
discretion depending upon, for example, the severity of the impairment 
of the waterbody, the type of pollutant, or the distance of the offsets 
from the new discharge. Such additional measures could include 
pollution prevention plans or conservation easements which could ensure 
continued reasonable further progress. EPA invites comment on what 
measures, in addition to the offset requirement, permitting authorities 
should consider requiring of large new dischargers and existing 
dischargers undergoing a significant expansion.
    EPA believes an offset requirement of one and half times the amount 
of the increased loading the discharger is proposing to discharge (with 
exceptions) is appropriate and invites comment on whether a different 
amount would be better suited to ensuring reasonable further progress 
toward restoring water quality standards prior to the approval or 
establishment by EPA of TMDLs. EPA invites comment on whether there may 
be reasons, other than uncertainty, why the Director may find it 
necessary to adjust the offset requirements in amounts greater than one 
and half times the proposed discharge. EPA also invites comments on 
whether the Director should have the discretion to allow an offset less 
than one and half times the proposed discharge, but at least greater 
than the amount of the proposed discharge and if so, for what reasons. 
One option would be to require an offset at least equal to the amount 
of the proposed discharge, but allow the Director the discretion to 
determine how much progress beyond a one to one offset is necessary to 
ensure reasonable further progress. Finally, EPA invites comment on 
whether the Director should have the discretion to waive the 
requirement for an offset if any offset would result in further 
degradation of water quality. If not, for what reasons and also, if the 
concurrence of EPA should be required before the Director makes such a 
determination.
    iv. Would the Reasonable Further Progress Requirements Apply to 
Affected Dischargers Proposing to Discharge to All Waters of the U.S.?
    EPA is establishing a new provision at 40 CFR 131.12(a)(1)(ii) that 
requires a new discharger or existing discharger undergoing a 
significant expansion discharging into a waterbody that does not meet 
water quality standards, and for which EPA has not yet approved or 
established a TMDL, the pollutant(s) causing the non-attainment to 
achieve reasonable further progress toward attaining water quality 
standards. Thus, this provision applies to a new discharger or existing 
discharger undergoing a significant expansion discharging into any 
waterbody of the United States that does not attain water quality 
standards (as defined in 40 CFR 131). Where a waterbody receives a 
thermal discharge from one or more point sources, impaired means that 
the waterbody does not have or maintain a balanced indigenous 
population of shellfish, fish, and wildlife. Exceedance of a narrative 
criterion in a waterbody means that the waterbody does not attain water 
quality standards.
    v. Why is EPA Proposing to Subject Only New Dischargers and 
Existing Dischargers Undergoing a Significant Expansion to These 
Requirements?
    EPA is proposing today to establish the offset requirement 
discussed above only for large new and significantly expanding 
dischargers of the pollutant of concern into an impaired waterbody. EPA 
believes that this new requirement is appropriate for these dischargers 
because it will enable discharges to occur in impaired waterbodies 
while ensuring that progress toward attaining water quality standards 
is achieved in those waterbodies. EPA believes that subjecting large 
new and significantly expanded dischargers to more stringent water 
quality standards is supported by the same logic which led Congress to 
establish more stringent technology based requirements for new sources 
under other provisions of the CWA.
    Given that this offset provision would be a requirement only until 
a TMDL is approved or established by EPA for a waterbody not attaining 
water quality standards, it makes sense as a practical matter to apply 
this requirement only to large sources which are adding new loads of 
the pollutant of concern to the waterbody. Existing dischargers are 
likely to be in a poorer position to bargain for offsets because they 
may not have a realistic option to locate on a different waterbody. 
Furthermore, it might be very disruptive to existing dischargers if 
they were required to offset their discharge before a TMDL is 
established only to possibly receive different permit limits and 
conditions once wasteload allocations and a margin of safety are 
established in a TMDL. EPA seeks to avoid these disruptions if 
possible. Finally, new dischargers will be undertaking construction and 
will be in a better position to modify their design so as to minimize 
pollution, and thus minimize the amount of their offset.
    EPA also believes that subjecting for new and significantly 
expanding dischargers to these new requirements is consistent with the 
CWA more generally. In its technology-based provisions, the Act 
provides a higher standard (best available demonstrated technology 
under new source performance standards) for new sources than for 
existing sources (best available technology economically available). 
Although in this regulation, EPA is addressing new dischargers and 
significantly expanding dischargers rather than ``new sources,'' EPA 
believes Congress' rationale for its treatment of new sources applies 
equally to new dischargers and significantly expanding dischargers. 
Congress chose to place more stringent technology based requirements on 
new sources both to

[[Page 46068]]

prevent new water quality impairments and because imposing stricter 
standards on new sources would be the most efficient means of solving 
existing water quality problems. Here, the Agency is proposing to 
regulate more stringently two types of dischargers which are adding new 
loads of a pollutant of concern to ensure reasonable further progress 
toward attaining of water quality standards.
    First, consistent with other provisions in EPA regulations, EPA is 
proposing to treat new dischargers more stringently than existing 
dischargers. An example of such treatment is the extent to which 
variances to water quality standards are available to new dischargers 
when compared to existing dischargers. See 63 FR 36761. Compliance 
schedules have also not been available to new dischargers to the same 
extent that they are available for existing dischargers. 40 CFR 122.47. 
EPA is proposing to further develop this differential treatment of new 
dischargers by creating new provisions at 40 CFR 122.4(j) and 
131.12(a)(1)(ii). These provisions together will subject new and 
significantly expanding dischargers proposing to discharge into 
impaired waterbodies to the new requirements outlined but not existing 
dischargers under the same or similar circumstances.
    Second, EPA also believes that it is appropriate to extend these 
requirements to significant expansions of existing discharges due to 
the similar impacts which occur as a result of significant new 
pollutant loads. EPA believes this is consistent with the general 
approach of the CWA to prevent new water quality pollution problems. 
Although these sources are existing sources, their ``significant 
expansions'' will have the same or similar effect with respect to 
creating new water quality impairments as the truly new source. 
Undertaking a significant expansion may provide certain opportunities 
for a discharger to achieve efficiencies in solving water pollution 
problems, similar to the opportunities available to new sources. EPA's 
proposed definition of ``significant expansion'' is discussed above 
(see Section A5).
    EPA invites comments on whether the requirement for offsets should 
apply to both new and significantly expanding dischargers, and reasons 
why the requirement should apply to one class of discharger versus 
another.
    vi. Would All New Dischargers and Existing Dischargers Undergoing a
    Significant Expansion Be Subject to These Proposed Requirements?
    EPA is proposing today to subject only those new and significantly 
expanded dischargers not meeting the definition of a small entity under 
the Regulatory Flexibility Act (see 5 U.S.C. 601(6)) to the offset 
requirements of this rule. The Regulatory Flexibility Act (``RFA'') 
states that the term ``small business'' has the same meaning as the 
term ``small business concern'' under section 3 of the Small Business 
Act (SBA). This meaning holds unless an agency, after consultation with 
the Office of Advocacy of the Small Business Administration and after 
opportunity for public comment, establishes one or more definitions of 
such term which are appropriate to the activities of the agency and 
publishes such definition(s) in the Federal Register. 5 U.S.C. 601(3). 
EPA has not proposed to establish a different definition of the term 
for this proposed rule.
    The SBA defines ``small-business concern'' as one which is 
independently owned and operated and which is not dominant in its field 
of operation. 15 U.S.C. 632. Pursuant to the SBA, the Small Business 
Administration has specified additional detailed definitions or 
standards by which a business concern may be determined to be a small 
business concern. Also under the RFA, the term ``small organization'' 
means any not-for-profit enterprise which is independently owned and 
operated and is not dominant in its field. This meaning holds unless an 
agency establishes, after opportunity for public comment, one or more 
definitions of such term which are appropriate to the activities of the 
agency and publishes such definition(s) in the Federal Register. 5 
U.S.C. 601(4). The term ``small governmental jurisdiction'' means 
governments of cities, counties, towns, townships, villages, school 
districts, or special districts, with a population of less than fifty 
thousand. This meaning also holds unless an agency establishes, after 
opportunity for public comment, one or more definitions of such term 
which are appropriate to the activities of the agency and which are 
based on such factors as location in rural or sparsely populated areas 
or limited revenues due to the population of such jurisdiction, and 
publishes such definition(s) in the Federal Register. 5 U.S.C. 601(5). 
Again, EPA has not proposed alternative definitions for purposes of 
this rule. Finally, the term ``small entity'' has the same meaning as 
the terms ``small business'', ``small organization'' and ``small 
governmental jurisdiction'' defined in the RFA. 5 U.S.C. 601(6).
    EPA is proposing to limit the scope of this new provision because 
it is a new requirement which is needed only in the interim before 
TMDLs are approved or established by EPA. Also, such narrowed coverage 
is more likely to ensure development of a successful market for 
pollutant trading.
    In today's proposal, EPA is requiring large (i.e., not meeting the 
definition of a small entity under the Regulatory Flexibility Act (see 
5 U.S.C. 601(6)) new and significantly expanding dischargers to offset 
any increase in mass loadings. EPA believes this is an important step 
toward achieving the CWA goal to ``* * * restore and maintain the 
chemical, physical and biological integrity of the Nation's waters.'' 
Section 101(a). In exercising its discretion to impose this new 
requirement on large dischargers, EPA notes that all dischargers will 
continue to need permit limits that derive from and comply with water 
quality standards (see 40 CFR 122.44(d)). In evaluating the significant 
number of the nation's waters on State section 303(d) lists, and the 
amount of time necessary for States to establish and implement TMDLs, 
EPA concluded that in the interim period before a TMDL is approved or 
established by EPA, it is necessary to establish a new requirement in 
an effort to ensure reasonable further progress toward attaining water 
quality standards, consistent with the goals of the Act. The 
requirement is thus, both incremental and interim, and at this time EPA 
is choosing to impose it only on those dischargers the Agency believes 
are in the best position to achieve offsets.
    a. How Would This Proposal Facilitate the Establishment of Trading 
Markets?
    In developing these revisions to the federal antidegradation 
policy, EPA considered the most likely approach by which to establish a 
trading mechanism between new and existing dischargers undergoing a 
significant expansion, and existing sources of pollutants. In effect, 
EPA is seeking to establish a market for pollutant trading, in the 
hopes of creating more effective and efficient mechanisms for restoring 
water quality. EPA believes that requiring offsets from facilities 
which are not small entities, as defined by the Regulatory Flexibility 
Act, will focus the initiation of such a market on those entities which 
have the greatest likelihood of securing offsets. Large dischargers are 
more likely to have access to data and information, both environmental 
and economic, that can be used in identifying, analyzing and allocating 
offsets. Large dischargers are also more likely to have the resources 
to devote to negotiating offsets with other entities.

[[Page 46069]]

    EPA recognizes that establishing the framework for such a market in 
pollutant trading presents many challenges. Nonetheless, EPA believes 
that creating the offset requirement would provide a valuable mechanism 
for ensuring reasonable progress toward attaining water quality 
standards. EPA believes the expenditure of resources to establish a 
market in pollutant trading will be compensated for by such factors as 
reduced overall costs in meeting water quality standards, the ability 
to locate a new enterprise or expand an existing enterprise, and 
increased flexibility in designing pollution control systems. Such a 
market, once established, would also provide other, more efficient 
opportunities for improving water quality, as States and Tribes 
implement watershed protection programs. EPA has developed draft 
guidance on how to conduct watershed-based trading which addresses the 
benefits and types of trades and how trading can be implemented to 
attain and maintain water quality standards. Draft Framework for 
Watershed-based Trading, EPA 800-R-96-001, May, 1996.
    Trading in pollutant discharges is not a retreat from the CWA 
goals. It can be a more efficient, market driven approach to meeting 
these goals. EPA supports only trades that meet CWA requirements. 
Through trading, EPA seeks to encourage innovative approaches and the 
flexibility to implement load reductions in ways that maximize water 
quality improvements and minimize costs. In allowing offsets as the 
means to ensure reasonable further progress toward attaining the water 
quality standard, EPA is seeking to generate environmental benefits in 
the most cost-effective manner.
    EPA invites comments on whether the requirement for offsets as a 
means of ensuring reasonable further progress should be limited to 
entities which are not small entities as defined by the Regulatory 
Flexibility Act. EPA also invites comments on extending this 
requirement to other entities which may be small entities under SBREFA.

C. How Would EPA Ensure Any Needed Changes to the Antidegradation 
Policies in State, Territorial and Tribal Water Quality Standards?

    With this notice of proposed rulemaking, EPA is initiating 
development of Federal water quality standards pursuant to section 
303(c)(4)(B) of the CWA. EPA intends to promulgate, as the EPA 
Administrator determines necessary, Federal water quality standards for 
any State, Territory or Tribe which does not adopt or already have in 
place water quality standards which include provisions consistent with 
40 CFR 131.12(a)(1)(ii) as ultimately promulgated. EPA believes such a 
Federal promulgation could be necessary to ensure consistent, 
nationwide application of any final provisions of 40 CFR 
131.12(a)(1)(ii) in the period before the establishment of TMDLs for 
waterbodies that do not meet water quality standards. EPA is today 
providing notice of the Agency's intent for the Administrator to make a 
determination whether a Federal promulgation is necessary for any 
State, Tribe or Territory. EPA will delay this determination to allow 
States, Territories and Tribes the opportunity to adopt their own water 
quality standards. Any State, Territory or Tribe which expeditiously 
acts to adopt standards consistent with the Agency's final promulgation 
of this section would not be included in the proposed Federal water 
quality standards. Further, EPA would initiate withdrawal of any 
Federal promulgation for a State, Territory or Tribe that adopts 
standards consistent with 40 CFR 131.12(a)(1)(ii).
    EPA acknowledges that many States, Territories and Tribes may face 
difficulties in completing adoption of water quality standards in the 
time frame envisioned by the Agency. Nonetheless, EPA believes it is 
important to have this mechanism firmly established in State, 
Territorial or Tribal water quality standards in order to ensure 
reasonable further progress toward restoring designated uses in the 
period of time prior to the completion of TMDLs. This requirement would 
only apply prior to the establishment and implementation of the TMDL 
for a waterbody not meeting water quality standards.

D. How Would These Changes Be Implemented Through NPDES Permits?

    New dischargers or existing dischargers undergoing a significant 
expansion are required, under 40 CFR 122.4(i), to have permit limits or 
conditions that ensure that they will not cause or contribute to a 
violation of water quality standards. A new discharger or an existing 
discharger undergoing a significant expansion required to offset their 
proposed discharge pursuant to 40 CFR 131.12(a)(1)(ii), would also be 
subject to additional requirements relating to the mechanics of 
obtaining and maintaining an offset. EPA believes that these 
additional, new requirements are necessary to ensure that the offsets 
will in fact be realized. Each of these requirements are specified in a 
new section 40 CFR122.4(j)(2), and explained in detail below.
1. Must the New or Significantly Expanding Discharger Obtain an Offset 
of the Same Pollutant(s) the New or Significantly Expanding Discharger 
Would Be Required To Offset?
    Proposed 40 CFR 122.4(j)(2)(i) would require the discharger seeking 
an offset to obtain the pollutant load reductions from one or more 
sources of the pollutant(s) for which the waterbody is impaired. This 
pollutant(s) must also be the same pollutant(s) the new or existing 
discharger undergoing a significant expansion would be required to 
offset. For example, the waterbody may be impaired by both copper and 
lead. If a new discharger wishes to discharge copper (and not lead), 
the discharger must obtain the requisite amount of pollutant load 
reductions from a source(s) that is currently discharging copper into 
the waterbody.
    EPA recognizes that there may be circumstances where reasonable 
further progress toward attaining water quality standards could best be 
served by allowing the Director the discretion to offset a new or 
expanded discharge of one pollutant with a load reduction of a 
different pollutant for which the waterbody is also impaired. EPA, 
however, is concerned with the technical difficulties of implementing 
such an option and therefore, is not proposing it. EPA requests comment 
on the possibility of allowing such discretion and on how the technical 
difficulty of determining an appropriate offset for a different 
pollutant could be resolved.
2. From What Geographic Area Would the Pollutant Load Reductions Need 
To Be Obtained?
    Proposed 40 CFR 122.4(j)(2)(ii) would require the discharger to 
obtain the pollutant load reductions from one or more sources located 
on the same waterbody as the discharge from the new discharger or 
existing discharger undergoing a significant expansion. To determine if 
a source(s) is located on the same waterbody, for purposes of obtaining 
an offset under 40 CFR 131.12(a)(1)(ii), there would need to be a 
direct hydrological connection between two sources. For example, there 
must be a direct hydrologic connection between the outfall of the 
existing point source where the reductions are realized and the outfall 
of the proposed discharge.
    States should be able to assist in the determination of whether a 
source is located on the same waterbody. States often identify their 
waters and assign waterbody identification numbers to specific 
hydrologic units, often called

[[Page 46070]]

segments. States are also required to identify all waterbodies not 
attaining water quality standards for the purposes of establishing a 
TMDL. For the purposes of section 303(d) listing, a waterbody pollutant 
combination will have a unique identifier so that the status of each 
listed waterbody can be tracked over time. States often delineate these 
segments based on hydrologic features, such as the presence of a dam, 
the confluence of two rivers, or gradations of salinity in an estuary. 
If a source is located on a waterbody with the same identification 
number, this would be a good indication that it is located on the same 
waterbody for purposes of obtaining an offset. EPA invites comment on 
other conditions that would identify whether a source is located on the 
same waterbody. EPA believes this requirement is reasonable, as is 40 
CFR 122.4(j)(2)(i), because it ensures that the results from the offset 
will be effective in benefitting waterbodies not attaining water 
quality standards for a particular pollutant(s).
    EPA intends the offset to result in reasonable further progress 
toward attaining water quality standards. The most appropriate 
hydrologic unit, and therefore geographic area within the same 
waterbody, depends on site-specific hydrologic conditions such as water 
chemistry, ecological parameters, and the location, number and types of 
sources already discharging to that waterbody. An offset can be 
obtained from a source located downstream from the new or significantly 
expanding discharger provided that source is discharging to the same 
body of water. An offset would not be appropriate if obtained outside 
of the impaired waterbody in which the new or significantly expanded 
discharger is located. EPA would also like comment on whether sources 
providing pollutant load reductions for offsets, should be located only 
upstream of the new or significantly expanding source.
    EPA recognizes that air deposition contributes to some of the water 
quality problems that exist today. EPA is considering whether to allow 
an offset from an air pollution source emitting the same pollutant the 
new or significantly expanded discharger is proposing to discharge. EPA 
would consider this only where the air pollution source directly 
affects the waterbody in the vicinity of the new or significantly 
expanded discharge. EPA invites comment on how some of the additional 
requirements related to obtaining an offset would be met if EPA allowed 
dischargers to obtain offsets from an air pollution source(s). In 
particular, EPA invites comment on whether the requirement in 40 CFR 
122.4(j)(2)(v) (discussed below) to modify an offsetting source's NPDES 
permit to reflect the required reductions should be expanded to require 
permit modifications when offsets are obtained from permitted air 
pollution sources. 40 CFR 122.4(j)(2)(v) would require the permit 
regulating the source from which the offset is obtained to be modified 
to reflect the pollutant load reductions.
3. Could the Pollutant Load Reductions Come From a Source With Existing 
Requirements To Reduce its Loads?
    Proposed 40 CFR 122.4(j)(2)(iii) would require that the pollutant 
load reductions be the result of pollutant control measures implemented 
by, or secured and assured by, the new discharger or existing 
discharger undergoing a significant expansion. To satisfy this 
requirement, the discharger must obtain the reductions from one or more 
sources discharging the pollutant(s) of concern to the same waterbody. 
If the discharger wishes to obtain the reductions from another source 
in the same waterbody, the pollutant control measures must be the 
result of an entirely new agreement and/or requirement for the 
offsetting source. In other words, if the offsetting source, for any 
reason other than to satisfy the proposed discharger's offset 
requirements, was already required to construct or install the 
pollutant control measures, the proposed discharger could not receive 
credit for the resulting reductions. EPA believes this requirement is 
reasonable because the load reductions would be a new requirement on 
the offsetting source intended to result in reasonable further progress 
toward attaining water quality standards where such progress was not 
otherwise required.
4. When Would the Pollutant Load Reductions Need To Be Obtained?
    Proposed 40 CFR 122.4(j)(2)(iv) would require the discharger to 
achieve the pollutant load reductions on or before the date the new or 
significantly expanding discharger begins to discharge. For reductions 
to be achieved on or before the discharger begins to discharge, the 
pollutant control measures would have to be in place. The discharger 
would also need to satisfy any requirements that the Director 
determined were necessary to demonstrate that the pollutant control 
measures were in place and the requisite amount of pollutant load 
reductions are and will continue to be realized. Such requirements 
might include sampling, either at the discharge point or instream, and 
reporting the results of those samples both before and after the 
pollutant control measures were put in place. The results would need to 
show that the requisite amount of pollutant load reductions are and 
will continue to be realized. EPA invites comment on other ways the 
discharger may make this demonstration.
    EPA is also proposing to give the Director the discretion to not 
require that the pollutant load reductions be obtained on or before the 
date the discharge commences. The Director would have this discretion 
in circumstances where the Director determines that a different time 
frame for obtaining and maintaining the offset would best serve the 
goal of reasonable further progress toward attaining water quality 
standards. One example of such circumstances is where it is not 
possible for the new or significantly expanding discharger to 
demonstrate that the pollutant load reductions are being realized on or 
before the date the discharge commences. An example of such a case is 
where the source of the offset involves a reforestation effort. In this 
instance, it will take time to produce reduction results because of the 
time required for trees and/or shrubs for example, to grow.
    In exchange for not requiring that the offsets be achieved on or 
before the date the discharge commences, the Director must require that 
the discharger obtain pollutant load reductions by an amount of at 
least twice the amount of the new or expanded discharge. The Agency 
believes this requirement is reasonable because in exchange for the 
degree of uncertainty involved in whether the pollutant load reductions 
will in fact be realized, the discharger will be able to discharge 
prior to obtaining the reductions. In addition, it ensures that the 
Director's discretion will be exercised in a way that best serves the 
goal of reasonable further progress toward attaining water quality 
standards.
    Also, to provide assurances that the offsets will be achieved there 
would need to be an enforceable and defined schedule with milestones 
identified and sufficiently laid out in the proposed discharger's 
permit. The use of this discretion would not be permitted in instances 
where the TMDL is scheduled to be established before the offset is 
fully realized. EPA invites comment on this aspect of the proposal 
including whether the Agency should provide for these exceptions to the 
requirement that the pollutant load reductions be achieved on or before 
the date the discharge commences.

[[Page 46071]]

5. How Long Would the Pollutant Load Reductions Need To Be Maintained?
    Reductions would also need to be maintained until the TMDL for the 
waterbody is approved or established by EPA or until the new or 
significantly expanding discharger ceases to discharge. Where a TMDL 
has been approved or established by EPA, the new or significantly 
expanding discharger would need to maintain the reductions until its 
permit contained effluent limits or conditions consistent with its WLA 
in the TMDL. To maintain the reductions, regular monitoring reports 
would need to be submitted to ensure their continued achievement. 
Depending on the source(s) from which the discharger is obtaining the 
reductions (see discussion below under sections D6 and D7), the reports 
might be submitted by either the discharger or the offsetting 
source(s). The permitting authority would determine the appropriate 
number of samples and how often monitoring reports would need to be 
submitted. The Agency emphasizes that it is not sufficient for the TMDL 
to be approved or established by EPA; the new or significantly 
expanding discharger would also need to have limits or conditions in 
its NPDES permit that reflect its WLA in the TMDL. At that point, the 
discharger's WLA under the TMDL would supercede the offset 
requirements.
    Also, if the discharger stops discharging prior to the time a TMDL 
for the waterbody is approved or established, the discharger would no 
longer be required to maintain the reductions. For example, if a new 
construction operation is expected to last eight months and the TMDL 
will not be established for six years, the new discharger (construction 
operation) need only maintain the reductions for the time in which the 
discharge from the operation is ongoing (eight months).
    EPA believes this requirement is reasonable because the offset is a 
condition of being permitted to discharge. Therefore, it should be in 
place on or before the discharger starts to discharge, unless this 
requirement is modified by the Director under 40 CFR 
122.4(j)(2)(iv)(B), and remain in place until the discharger either 
stops discharging or until the TMDL is established and implemented with 
respect to that discharger. Again, EPA intends that this requirement be 
an interim measure and notes that the TMDL process is the appropriate 
means of determining WLA/LAs that are necessary to attain and maintain 
water quality standards. EPA does, however, invite comment on requiring 
the offset to be maintained indefinitely (before and after the TMDL is 
established). Requiring the offset to be maintained both before and 
after the TMDL would prevent reintroducing pollutants to a waterbody 
where they have already been removed, although this issue should be 
addressed in the development of the TMDL itself.
6. What Would Be Required When the Source of the Offset Is an Existing 
Point Source?
    Proposed 40 CFR 122.4(j)(2)(v) would require that where a 
discharger obtains pollutant load reductions from an existing point 
source(s), as defined in the CWA, that existing point source(s)'s NPDES 
permit would need to be modified to reflect the reductions. The 
permitting authority would also need to consider the need for any 
additional monitoring and reporting requirements to ensure that the 
reductions are being maintained. This modification would need to take 
place on or before the date the new permit is issued to the proposed 
discharger. EPA believes this requirement is reasonable because 
requiring that the permit for the existing point source(s) be modified 
to reflect the reductions creates a level of accountability. This 
accountability stems from the reductions being contained as permit 
limits in an enforceable permit. If the existing point source(s)'s 
discharge monitoring reports do not show that the reductions are being 
realized, the point source(s) would not be in compliance with its 
permit and thus, would be subject to an enforcement action.
    The Agency again, notes that because the existing point source(s)'s 
permit would be modified to reflect the reductions, the offset 
requirement would be accounted for as a result of that modification. 
Therefore, it would not be necessary to incorporate the offset 
requirements in the new or significantly expanding discharger's permit. 
The Agency recognizes that there may be additional costs and delays 
associated with modifying the offsetting source's permit to reflect the 
reductions and therefore, requests comment on suggestions for a 
streamlined approach to accounting for the offset requirements. In 
particular, the Agency invites comment on incorporating the offset 
requirement in the new or significantly expanding discharger's permit 
rather than the modifying the existing point source(s)'s permit.
    Today's proposal would require the existing, offsetting point 
source(s)'s permit to be modified to reflect the pollutant load 
reductions on or before the date a permit is issued to the new or 
significantly expanding discharger. EPA notes that there may be a time 
period during which the existing offsetting point source(s)'s permit 
has been modified but the proposed discharger has not yet begun 
discharging. EPA expects that this time period, if any, would be short-
term. However, if there is a significant delay before the new or 
significantly expanding discharger starts to discharge, one option 
would be to place alternate effluent limits in the existing 
discharger's permit. One limit would be applicable before the proposed 
discharger starts to discharge and the other limit would be applicable 
after the proposed discharger starts to discharge. EPA invites comment 
on the idea of placing alternate effluent limits in the permit for the 
offsetting source.
    EPA also recognizes that the source from which the offset is 
obtained may be discharging at levels less than their current permit 
limits. In these cases, the baseline used to calculate the appropriate 
reductions would be the offsetting source's actual and current loads 
not their current permit limit. It is EPA's intent that the offsets 
result in corresponding reductions in actual loads despite the 
existence of a higher permit limit. The offsetting source's permit 
would then need to be modified to reflect the corresponding reductions 
in actual loads. This does not necessarily mean that the permit limits 
would be adjusted to match the new actual load. Sources often target a 
discharge level below the permitted amount in order to ensure 
continuous compliance. In fact, EPA believes that well operated sources 
should do this. It is likely that a source which was discharging below 
its original permit limits would continue to target a discharge level 
below any new permit limits designed to implement an offset. The exact 
permit limits necessary to implement the offset would be determined on 
a case-by-case basis by the permitting authority.
7. What Would Be Required When the Source of the Offset Is an Existing 
Nonpoint Source?
    Proposed 40 CFR 122.4(j)(2)(vii) would require that where a 
discharger obtains pollutant load reductions from an existing nonpoint 
source(s), the discharger's NPDES permit would need to contain any 
conditions necessary to ensure that the load reductions from the 
nonpoint source will be realized. These include such things as the 
offset requirements themselves and any accompanying monitoring and 
reporting requirements to ensure continued achievement of the pollutant 
load

[[Page 46072]]

reductions (from the nonpoint source(s)). The Director may also wish to 
establish alternate effluent limits in the permit for the new 
discharger that would become effective if and when the pollutant load 
reductions are not maintained. EPA invites comment on whether to 
require the permitting authority to include alternate effluent limits 
in the new or significantly expanded discharger's permit.
    EPA believes the requirement in proposed 40 CFR 122.4(j)(2)(vi) is 
reasonable for the same reasons stated above for 40 CFR 122.4(j)(2)(v). 
Requiring the offset and accompanying monitoring and reporting 
requirements to be placed in the proposed discharger's permit creates a 
level of accountability as a result of being contained in an 
enforceable permit. If the discharger's monitoring reports do not show 
that the reductions are being realized or if the discharger is not in 
compliance with an alternate permit limit, the discharger would not be 
in compliance with its permit and would be subject to an enforcement 
action. Assuming there is an enforceable contract between the new or 
significantly expanding discharger and the nonpoint source (the 
agreement under which the pollutant load reductions will be achieved 
and maintained), in the event that there is a lack of reported 
reductions which is at the fault of the nonpoint source, the discharger 
should have an enforceable remedy against the nonpoint source (e.g., 
under contract law). Contract law may allow the new or significantly 
expanding discharger to recover costs or other remedies they negotiated 
in their agreement (any remedies the new or significantly expanding 
discharger may have against the nonpoint source would be a product of 
State contract law, outside of the NPDES permitting context).
8. How Would Offsets Be Obtained From Sources Seeking Coverage Under a 
General Permit?
    Determining whether and in what amount an offset would be required 
from dischargers seeking coverage under a general permit would 
necessarily differ from the same determinations for dischargers 
applying for individual permits. Several issues arise with respect to 
dischargers seeking coverage under a general permit when the discharge 
would be to a waterbody not attaining water quality standards. The 
first issue is whether and how the discharger would know if the 
receiving water is one that does not meet water quality standards. Most 
discharges seeking coverage under a general permit are required to 
submit a notice of intent (NOI) form to claim authorization to 
discharge. However, there is typically no information requested on the 
NOI, other than identifying the latitude and longitude of the facility 
that would help to identify the water quality status of the receiving 
water. The second issue is whether the discharger and/or permitting 
authority would know if the discharger's proposed effluent would 
contain the pollutant(s) causing the impairment. The third issue is if 
the pollutant(s) of concern is detected, how would the permitting 
authority obtain the information indicating the amount of that 
pollutant(s) the discharger is proposing to discharge. An NOI form 
typically does not request information on the pollutant(s) expected in 
the discharge. Absent any explicit information requirement for NOI 
forms, it is unlikely that the discharger or permitting authority could 
determine whether a discharger would be required to obtain an offset 
under proposed 40 CFR 131.12(a)(1)(ii). EPA invites comment on how to 
fill this information need.
    i. What Options Is the Agency Considering?
    One option that the Agency is considering to fill this information 
need would be to amend the general permit regulations at 40 CFR 
122.28(b)(2)(ii) and 40 CFR 122.28(b)(2)(v) to require the general 
permit applicant to provide this additional information. Section 
122.28(b)(2)(ii) discusses the contents of an NOI. For purposes of 
notifying the permitting authority about the localized attainment of 
water quality standards and to determine whether a proposed discharger 
would be required to obtain an offset, EPA is considering whether the 
following language should be included in the general permit provision:

    ``New dischargers or existing dischargers undergoing a 
significant expansion (as defined in 40 CFR 122.2) but not those 
that are small entities (as defined in 5 U.S.C. 601(6)) (see 
discussion under proposed 40 CFR 131.12) must determine whether the 
receiving water meets water quality standards. Operators that are 
discharging or proposing to discharge to a waterbody that does not 
meet water quality standards and for which a TMDL has not been 
established and approved must certify that the discharge does not 
add the pollutant(s) for which the waterbody is impaired. 
Dischargers that do add the pollutant(s) for which the waterbody is 
impaired and for which a TMDL has not been established or approved 
must apply for an individual permit and are subject to the 
requirements in 40 CFR 122.4(j).''

EPA notes that the Director already has authority to require a general 
permit applicant to apply for and obtain an individual permit under 40 
CFR 122.28(b)(3)(i).
    To determine whether the receiving water is impaired, the applicant 
could contact the appropriate State agency or check the State's 303(d) 
list of waters not attaining water quality standards. The State may 
have several ways for the public to access the information in the 
303(d) list, including access via the World Wide Web.
    The supplemental certification could request the applicant to 
provide information on the expected contents and amount of pollutant(s) 
in its proposed discharge. This type of information would assist the 
applicant and the permitting authority in identifying whether the 
pollutant of concern is in the proposed discharge and if it is, to 
determine what, if any, offset is required. The contents of this 
supplemental certification could be similar to the contents of Item V 
on Form 2D but focused on the pollutant(s) for which the waterbody is 
impaired. Some new applicants for EPA-issued individual permits use 
NPDES application Form 2D. EPA Form 3510-2D (9/86). The permit 
application regulations at 40 CFR 122.21(k)(5) (as reflected at Item V 
on Form 2D) require each applicant to estimate and report data on the 
pollutants that the applicant expects to discharge (per outfall). 
Sampling and analysis are not required for purposes of the application 
requirement. If data from such analyses are available, however, then 
that data should be reported. Section 122.21(k)(5) and Parts A-C of the 
application require the applicant to provide an estimate of the maximum 
daily and average daily value for certain identified pollutant(s). This 
estimate is based on the applicant's determination of whether a 
pollutant will be present in their discharge. The applicant could base 
this determination on knowledge of the proposed facility's raw 
materials, maintenance chemicals, intermediate and final products, 
byproducts, and any analyses, if available, of their effluent or of any 
similar effluent.
    Other sources upon which to base the estimate could include 
available in-house or contractor's engineering reports and any other 
studies performed on the proposed facility. Also, if an effluent 
guideline applies to the facility or similar facilities, then the 
development document to the effluent guideline may provide additional 
information. If there is an applicable effluent guideline and the 
pollutant(s) of concern is not addressed in the guideline, however, 
this would not be conclusive evidence that the pollutant(s) of concern 
is not present. If

[[Page 46073]]

the applicable effluent guideline does address the pollutant(s) of 
concern, that recognition should be considered as a rebuttable 
presumption that the pollutant(s) of concern will, in fact, be present 
in the discharge.
    EPA is also considering another option to fill this information 
need. This option would require these dischargers to submit a 
supplemental certification that they have already obtained and are 
continuing to maintain the requisite offset requirements. However, EPA 
has concerns about how this would work. In particular, EPA is concerned 
with how this permit applicant would determine the amount of the 
pollutant(s) of concern in its proposed discharge and in turn, 
determine the amount of required offset. When determining the proper 
offset required in an individual permit, the Director would have 
discretion to consider a number of variables. For example, if the 
applicant decides to obtain offsets from a nonpoint source, maintenance 
of the offset could remain highly uncertain. To compensate, the 
Director could appropriately require the applicant to obtain and 
maintain a greater offset (see discussion above in section 
(B)(3)(iii)(b)). Given discretionary considerations such as these, 
offset determinations may be difficult to implement for general 
permittees. EPA requests comments on how such compensation could be 
implemented, where necessary, for general permit applicants under this 
option.
    EPA is considering a third option for general permittee offsets. 
This option would allow the general permits themselves to contain 
alternative sets of requirements depending on whether the discharge 
would be to a waterbody meeting water quality standards or a waterbody 
not meeting water quality standards. For permitted discharges to 
waterbodies not meeting water quality standards, requirements would be 
more stringent and/or prescriptive than those required for discharges 
to waterbodies that do meet water quality standards. Some general 
permits currently provide such differing requirements. For purposes of 
satisfying an offset requirement, an option might be to establish the 
more stringent and/or prescriptive requirements for discharges into 
impaired waterbodies in lieu of an individualized offset. The 
reductions needed to ensure reasonable further progress toward meeting 
water quality standards would be ``built in'' to the general permit. As 
with the second option discussed above, the permitting authority would 
not be able to tailor the offset requirements to the specific 
circumstances and discharge of the individual new or significantly 
expanding discharger. However, this option could allow the permitting 
authority to establish conditions in the general permit necessary to 
ensure that collectively, new and significantly expanding dischargers 
obtained offsets sufficient to achieve reasonable further progress 
toward attaining water quality standards. EPA invites comments on 
whether to allow more stringent and/or prescriptive requirements for 
discharges into impaired waterbodies in the general permit in lieu of 
requiring an individual permit.
    General permitting also creates complications regarding the 
requirements in 40 CFR 122.4(j)(2). In particular, the Agency 
anticipates it would be difficult to implement the specific 
requirements applicable when offsets are obtained from an existing 
nonpoint source(s). In these cases, an individual permit would need to 
include conditions necessary, including the offset requirements and any 
accompanying monitoring and reporting requirements, to ensure continued 
achievement of the reductions. EPA invites comment on how this 
requirement should be addressed in general permits.
    EPA requests comment on these three options as well as other 
possible approaches for satisfying the offset requirements for new or 
significantly expanding dischargers applying for a general permit and 
proposing to discharge into impaired waterbodies. In particular, EPA 
requests information on the burdens these options impose on regulated 
entities and State permitting authorities. EPA also requests comment on 
the water quality benefits of the three options and on whether the 
definition of a significant expansion should be different for general 
permittees than for individual permittees.
    ii. What If a Notice of Intent Form Is Not Required?
    General permitting presents additional implementation problems when 
an NOI form is not required. One option would be to amend 40 CFR 
122.28(b)(2)(v), which authorizes the Director to allow certain 
dischargers to be covered under a general permit without submitting an 
NOI. This section also identifies some sources for which the Director 
does not have this discretion. EPA is considering including new 
dischargers and existing dischargers undergoing a significant expansion 
(but not those that are '`small entities'' as defined in 5 U.S.C. 
601(6)), in the list of sources for which the Director would not have 
the discretion to waive the submission of an NOI. EPA invites comment 
on how this additional concern might be addressed.
    iii. Who and Under What Circumstances Would Need To Submit a 
Supplemental Certification?
    EPA recognizes that the language suggested above for an amendment 
to 40 CFR 122.28(b)(2)(ii) would require only new dischargers and 
existing dischargers undergoing a significant expansion that are not 
small entities as defined in 5 U.S.C. 601(6) to provide an additional 
certification for discharges to a waterbody not attaining water quality 
standards. Not requiring all new dischargers and existing dischargers 
undergoing a significant expansion to make this certification is 
consistent with the proposed requirements at 40 CFR 131.12(a)(1)(ii) 
because the offset requirement would only apply to those dischargers 
who are not considered ``small entities'' (as defined in 5 U.S.C. 
601(6)). Dischargers who do not fall within the definition of a small 
entity would be able to seek coverage under a general permit.
    iv. How Would Offsets Be Determined for Dischargers Regulated 
Solely by BMPs?
    Once it is determined that an offset is required, the amount of 
offset required must be determined as well. This issue is particularly 
important for applicants seeking coverage under a general permit. This 
issue involves how to determine the appropriate offset requirements (or 
offset equivalents) for dischargers regulated solely by best management 
practices (BMPs). For example, would it be appropriate to require more 
stringent BMPs, or additional ``offsetting'' BMPs from other sources in 
lieu of a pound-for-pound offset? EPA invites comment on how to address 
this issue as well.

E. Additional Proposed Modifications to Related NPDES Provisions

1. How Is EPA Proposing To Modify the Water Quality-Based Permitting 
Regulations?
    EPA is today proposing to include the phrase ``State 
antidegradation provisions'' in its water quality-based permitting 
regulations at 40 CFR 122.44(d)(1). Section 122.44 contains the 
requirements for establishing limitations, standards and other permit 
conditions in NPDES permits necessary to ensure that NPDES permits are 
protective of water quality standards. Including this phrase is 
clarifying only and not intended to create a substantive change. 
Including this phrase in these provisions gives added notice and 
clarification to EPA's longstanding policy which is well understood by 
the

[[Page 46074]]

States and the public, including regulated entities, that 
antidegradation policies and implementation procedures are required 
elements of State water quality standards.
2. How Is EPA Proposing To Modify the Regulations Pertaining to the 
Statement of Basis and Permit Fact Sheet?
    EPA is also proposing to change both 40 CFR 124.56 and 124.7. EPA 
believes this is necessary in light of the proposed changes to 40 CFR 
122.4(j) and 131.12. Section 124.56 lists specific items which must be 
placed in the fact sheet required by 40 CFR 124.8 of the NPDES 
regulations. EPA believes it is necessary to include, in the fact 
sheet, an explanation of how and why any decision was made by the 
Director with respect to any offsets required under 40 CFR 131.12. 
These include such things as the amount of the proposed discharge the 
new or significantly expanding discharger is required to offset as well 
as any monitoring and reporting requirements. Section 124.7 requires 
that a statement of basis be prepared in all situations where a fact 
sheet is not required. The contents of a statement of basis are similar 
to that of a fact sheet. EPA believes including this information in the 
fact sheet or in the alternative, the statement of basis, is 
appropriate for several reasons. The decisions regarding any offset 
will be dependent upon the specific facts and circumstances of a given 
scenario and therefore, those facts and circumstances should be made 
apparent. The public has a right to know how and why these decisions 
were made. EPA, to facilitate its authority to review permits, needs 
this information as well. This information is necessary for any appeals 
brought against the issuance of the permit or conditions therein 
contained.

III. Proposed Authority To Designate Additional Sources of 
Pollutants as Subject to the NPDES Program

    The NPDES regulations, in several provisions and under certain 
circumstances, allow the permitting authority and/or EPA to subject 
certain previously non-designated sources to NPDES program 
requirements. EPA established these jurisdictional regulations in 1973 
when the Agency and the States focused permitting resources primarily 
on continuous discharges, for example, industrial and municipal 
sources. Also, in the early stages of CWA implementation, the Agency 
and the States focused on implementation of technology-based standards. 
At that time, EPA attempted to limit the scope of the NPDES permitting 
program to certain types of point sources. The D.C. Circuit rejected 
that attempt, however, and explained that EPA could not exempt point 
sources from the NPDES program. NRDC v. Costle, 568 F.2d 1369, 1377 
(D.C. Cir. 1977). Although the Court rejected this attempt, it did 
recognize the Agency's discretion to define ``point source'' and 
``nonpoint source.'' The existing NPDES regulations identifying animal 
production and silvicultural sources represents an early attempt to do 
so.
    Today EPA is proposing certain changes to the NPDES regulations 
regarding designation of point sources for regulation under the NPDES 
permitting program. These point sources include discharges from animal 
production and silvicultural activities. EPA is proposing explicit 
language describing its authority, in States with approved NPDES 
programs, to designate animal feeding operations (AFOs) and aquatic 
animal production facilities (AAPFs) as sources subject to NPDES 
program requirements on a case-by-case basis. EPA regulations currently 
provide that ``the Director'' may, under certain circumstances, 
designate such facilities as point sources subject to NPDES 
requirements. The term ``Director'' is defined as the EPA Regional 
Administrator or the State Director, as the context requires, or an 
authorized representative. See 40 CFR 122.2. The definition explains 
that when there is an approved State program, ``Director'' normally 
means the State Director but that in some circumstances, EPA retains 
the authority to take certain actions even when there is an approved 
State program. Today's proposal includes explicit language describing 
EPA's authority, under certain conditions, to designate animal 
production facilities as sources subject to NPDES permitting. Today's 
proposal would also modify the regulation that identifies silvicultural 
point sources.

A. How Would Animal Feeding Operations and Aquatic Animal Production 
Facilities Be Affected by Today's Proposal?

    Some of the sources that would be affected by today's proposal 
include animal feeding operations (AFOs) and aquatic animal production 
facilities (AAPFs) located in States authorized to administer the NPDES 
program. In a 1995 guidance document, entitled ``Guide Manual on NPDES 
Regulations for Concentrated Animal Feeding Operations,'' EPA stated 
that in authorized States, only the State Director may designate an AFO 
as a concentrated animal feeding operation (CAFO). Today, EPA proposes 
to revise the regulations to state that EPA may, under certain 
circumstances, designate AFOs as CAFOs and also designate AAPFs as 
concentrated aquatic animal production facilities(CAAPFs), in NPDES-
authorized States. The revised regulations would facilitate EPA's 
provision of reasonable assurance that EPA-established TMDLs will be 
implemented where States fail to establish an approvable TMDL.
    This proposal applies to aquatic animal production facilities and 
not aquaculture projects. Although both types of operations produce 
aquatic livestock, aquatic animal production facilities differ from 
aquaculture projects. Aquaculture projects confine aquatic stock within 
jurisdictional waters of the United States. An aquatic animal 
production facility does not confine aquatic stock in jurisdictional 
waters of the United States. The aquatic area of confinement (e.g., 
manmade pond, raceway, etc.) may, however, discharge to jurisdictional 
waters of the United States. Aquaculture is specifically addressed in 
the CWA. CWA section 318. The statute does not specifically address 
aquatic animal production outside of waters of the United States, 
however, it is addressed in EPA regulations, as discussed above.
1. How Do These Sources Currently Become Subject to the NPDES Program?
    Under existing regulations, concentrated animal feeding operations 
and concentrated aquatic animal production facilities are subject to 
the NPDES program. One situation in which an animal feeding operation 
or an aquatic animal production facility is considered ``concentrated'' 
and thus subject to NPDES permitting, is when the Director so 
designates the operation or facility on a case-by-case basis. See 40 
CFR 122.23(c) and 122.24(c). Case-by-case designations are based on a 
determination that the operation or facility is a significant 
contributor of pollutants to waters of the United States. In 
designating an operation or facility as a significant contributor of 
pollutants, the Director essentially finds that the facility's 
discharges are more like point sources already subject to NPDES 
regulation than those agricultural nonpoint sources that are not.
    i. Under What Circumstances Are CAFOs Designated on a Case-By-Case 
Basis?
    EPA regulations define which AFOs qualify as CAFOs based on various 
criteria set out in the regulations. These criteria were established 
for a ``basic national standard and practical administrative 
approach.'' See 40 FR

[[Page 46075]]

54182, 54183 (11/20/75). To supplement this approach, EPA included a 
designation mechanism in the regulations. Through this mechanism, even 
where a source did not meet all of the regulatory criteria to become a 
CAFO, the Director, upon determining that the source is a significant 
contributor of pollutants to waters of the United States, could 
exercise its discretion and designate the source as a CAFO to ensure 
that the source would be regulated. In making this determination, the 
Director conducts an on-site inspection of the facility and considers 
the following factors: (1) The size of the animal feeding operation and 
the amount of wastes reaching waters of the United States; (2) the 
location of the animal feeding operation relative to waters of the 
United States; (3) the means of conveyance of animal wastes and process 
waste waters into waters of the United States; (4) the slope, 
vegetation, rainfall, and other factors affecting the likelihood or 
frequency of discharge of animal wastes and process waste waters into 
waters of the United States; and (5) other relevant factors. 40 CFR 
122.23(c). One such relevant factor could be the water quality of the 
receiving water including the degree of nonattainment.
    ii. Under What Circumstances Are CAAPFs Designated on a Case-by-
Case Basis?
    Permitting authorities can also designate any warm or cold water 
aquatic animal production facility for regulation under the NPDES 
permitting program on a case-by-case basis. 40 CFR 122.24. The 
Director, upon determining that the source is a significant contributor 
of pollutants to waters of the United States, may designate an aquatic 
animal production facility as a concentrated aquatic animal production 
facility. To make this determination, the Director conducts an on-site 
inspection of the facility and considers the following factors: (1) The 
location and quality of the receiving waters of the United States; (2) 
the holding, feeding and production capacities of the facility; (3) the 
quantity and nature of the pollutants reaching waters of the United 
States; and (4) other relevant factors. 40 CFR 122.24(c).
2. Why is EPA Proposing Changes to the CAFO and CAAPFs Jurisdictional 
Regulations?
    In some areas, pollutant contributions from small unregulated (by 
NPDES) animal production sources (terrestrial and aquatic) are the 
primary cause of impairment in some water segments. As indicated in 
the1996 Report to Congress under CWA section 305(b), agriculture, 
including both animals and cropland, is the leading source of water 
quality impairment of rivers and lakes. Based on data collected by the 
States and Territories, EPA estimated that, of the waters assessed, 25 
percent of the impaired river miles, 19 percent of the impaired lake 
acres, and 10 percent of the impaired estuarine square miles are 
polluted due to agricultural nonpoint sources of pollutants (EPA,1996). 
Thirty-eight of the States included specific agricultural sources of 
pollution in rivers.
    i. How do Animal Feeding Operations Impact Water Quality?
    Studies show that animal feeding operations, and particularly a 
concentration of these facilities in a single watershed, can increase 
nutrient pollution to a river or stream. A study of Herrings Marsh Run 
in the coastal plain of North Carolina showed that nitrate levels in 
streams and ground water were highest in areas with the greatest 
concentration of swine and poultry production. (Hunt, P.G., et al. 
1995. Impact of animal waste on water quality in an eastern coastal 
plain watershed. IN: Animal Waste and the Land-Water Interface, Kenneth 
Steele, Ed., Lewis Publishers, Boca Raton, FL, 589 pp.). Ortho-
phosphate levels were affected only slightly by animal waste 
applications because most of the phosphorus was bound by the soil. 
(Hunt, et al.,1995).
    Results from an Illinois case study indicated that two types of 
activities at small to medium-sized swine operations contributed to 
water quality problems. First, many producers had constructed open-
front facilities without including manure collection systems to contain 
feedlot runoff. Second, many producers practiced ``misting''and/or used 
on-site watering systems to cool off animals, which in turn generated 
conditions that caused uncontrolled pollutant runoff. This case study 
demonstrated how even small operations contributed significant amounts 
of pollutants to the receiving waters. (Ackerman and Taylor, 1995, 
Stream Impacts due to Feedlot Runoff. IN: Animal Waste and the Land-
Water Interface, Kenneth Steele, Ed., Lewis Publishers, Boca Raton, FL, 
589 pp.).
    AFOs can also cause catastrophic effects locally. In June 1995, 
animal waste contained in an eight-acre lagoon in North Carolina burst 
through its dike, spilling approximately 22 million gallons of animal 
waste into the New River. The spill reportedly killed fish along a 19-
mile downstream area. This was the worst of six reported spills in the 
State during the summer of 1995. (EPA Office of the Inspector General, 
March 1997, Animal Waste Disposal Issues, Audit Report No. E1XWF7-13-
0085-7100142).
    Several case studies have also been performed to document the water 
quality benefits of installing animal waste management systems. In 
South Dakota, for example, 9 feedlots were monitored to determine which 
most negatively impacted water quality through increased loads of 
nutrients. After installation of animal waste management systems, 
several feedlots exhibited evidence of improving water quality in 
streams. (South Dakota Association of Conservation Districts, South 
Dakota Department of Environment and Natural Resources, and USDA 
Natural Resources Conservation Service, 1996, Final Report--Animal 
Waste Management Team). EPA invites commenters to identify and submit 
additional data to support or refute these conclusions.
    ii. How Do Aquatic Animal Production Facilities Impact Water 
Quality?
    Other studies also indicate that aquatic animal production 
facilities cause significant adverse impacts on water quality. Such 
impacts include but are not limited to, oxygen depletion in surrounding 
waters, degradation of benthic (bottom) ecosystems, and increases in 
the severity of toxic algae blooms. The impact on water quality, 
however, varies per fish species and production facility. Pond and tank 
systems, for example, often discharge pulses of highly concentrated 
waste discharges during cleaning and harvesting. (Bergheim, A., A. 
Sivertsen, and A.R.Selmer-Olsen. 1982. Estimated Pollution Loading From 
Norwegian Fish Farms. I. Investigations 1978-1979. Aquaculture 28:347-
361). Catfish ponds, for instance, release effluents containing high 
concentrations of nutrients, often at concentrations exceeding water 
quality limits set by EPA and state governments. (Tucker, C.S. 1996. 
The Ecology of Channel Catfish Culture Ponds in Northwest Mississippi. 
Reviews in Fisheries Science 4(1):1-55). EPA invites commenters to 
identify and submit additional data to support or refute these 
conclusions.
3. What Changes Is EPA Proposing To Make to the CAFO and CAAPFs 
Jurisdictional Regulations?
    As stated previously, currently only the ``Director'' may designate 
these sources as subject to the NPDES program on a case-by-case basis 
and ``Director'' is defined as the EPA Regional Administrator or the 
State Director, as the context requires. 40 CFR 122.2. EPA foresees the 
need to make

[[Page 46076]]

future designations itself in authorized States in particular 
circumstances, although the Agency has only done so on occasion. 
Therefore, EPA is proposing to revise 40 CFR 122.23 and 122.24 to 
include explicit language describing that the Agency has the authority 
(under certain circumstances discussed below) to make such designations 
in instances when the State has not already done so.
    i. When Would EPA Designate These Sources?
    The proposed regulatory change would limit the exercise of this 
discretion to the situation when EPA establishes a TMDL for a waterbody 
in an authorized State and determines that designation is necessary to 
provide reasonable assurance that the wasteload allocations and load 
allocations under the TMDL will be achieved. By restricting the 
exercise of its discretion to this high priority circumstance, the 
Agency recognizes its own resource limitations, as well as the special 
role of authorized NPDES States in the federal system.
    States must submit each TMDL they establish to EPA for approval. 
Elsewhere in today's Federal Register, EPA proposes regulations to 
require States to submit a plan to implement the load allocations and 
wasteload allocations of a TMDL as a component of the TMDL. EPA would 
evaluate the adequacy of the implementation plan (a required element of 
a TMDL) in determining whether to approve a TMDL. If EPA disapproves a 
TMDL based on a determination that the implementation plan is 
inadequate, EPA would establish the TMDL itself, including an 
implementation plan.
    One of the proposed required elements of the implementation plan is 
that it contain reasonable assurance that the control actions and/or 
management measures required to implement the load allocations and the 
wasteload allocations established by the TMDL will be put in place and 
the load allocations and wasteload allocations will be met. Thus, EPA 
may disapprove the TMDL if it determines that the implementation plan 
lacks reasonable assurances. For example, EPA may determine that the 
implementation plan lacks reasonable assurances that certain animal 
feeding operations will achieve and maintain their respective pollutant 
load allocations. If working with the State to achieve reasonable 
assurance has failed, EPA would disapprove the TMDL and would be 
required to establish a TMDL, including an implementation plan. EPA may 
then determine that some animal feeding operations are significant 
contributors of pollutants to waters of the United States and that the 
best way for EPA to provide reasonable assurance that such an animal 
feeding operation achieves and maintains its assigned pollutant load 
allocation is through the issuance (and enforcement) of an NPDES 
permit. Under today's proposal, EPA could then invoke its designation 
authority and subject the animal feeding operation to the NPDES 
program. In similar circumstances, EPA could designate an unregulated 
aquatic animal production facility. The language in today's proposal 
about the Agency's intention and authority to designate unregulated 
animal production sources in authorized States--where EPA establishes a 
TMDL--supports the fulfillment of the CWA goals to attain and maintain 
water quality standards. The proposal also supports EPA's backstop 
authority, as specified in CWA section 303(d)(2), to establish TMDLs 
(including all required elements) for waterbodies for which the State 
fails to do so.
    ii. How Would This Proposal Affect States?
    The proposed regulation limits the exercise of this discretionary 
authority to situations where EPA establishes a TMDL. Many States have 
opportunities to provide ``reasonable assurances'' to control nonpoint 
source pollutants and/or pollution in ways (and based on authorities) 
that are not available to the federal EPA. When EPA establishes a TMDL, 
the federal authority to designate otherwise unregulated sources as 
point sources would provide a federally enforceable ``reasonable 
assurance'' that the allocation would be achieved. The Agency stresses 
that the authority proposed today would be used only in those 
circumstances where other means of working with the State have failed.
    iii. Who Would Issue Permits to These Sources Once Designated?
    EPA does not have authority to issue permits to the animal 
production facilities that the Agency designates for regulation in a 
State authorized to administer the NPDES program. That authority 
remains exclusively with the authorized State. CWA section 402(c). 
Instead, EPA relies on its authority to designate point sources under 
the CWA in general and the specific authority provided by CWA section 
501(a) to support the Agency's authority to designate point sources 
subject to regulation under the NPDES program, even in States 
authorized to administer the NPDES permit program. The interpretive 
authority to define point sources and nonpoint sources was recognized 
by the D.C. Circuit in NRDC v. Costle, 568 F.2d 1369, 1377 (D.C. Cir. 
1977). This interpretive authority arises from CWA section 501(a) when 
EPA interprets the term ``point source'' at CWA section 502(14).
4. How Would EPA Revise the Regulatory Text?
    EPA recognizes that many State agencies have limited resources to 
implement their NPDES programs and in many cases, a State's inaction in 
the designation of additional sources is not a result of an authorized 
State's unwillingness to assert regulatory authority over additional 
sources, but rather the perceived inability to assure timely issuance 
of individual permits for these sources in the face of competing 
priorities. Given increased reliance and success in control of point 
sources under State NPDES general permits, however, the Agency believes 
that EPA designation in these jurisdictions and in these instances will 
expedite the attainment of water quality standards without undue burden 
on authorized States.
    In order to achieve this result, EPA is proposing to modify 40 CFR 
122.23(c)(1), (3) and (4) and 40 CFR 122.24(c)(1)-(3) as reflected in 
proposed regulatory text. These modifications would specify that, in 
jurisdictions where EPA is not the NPDES permitting authority, EPA 
could (under certain circumstances) designate an animal feeding 
operation as a ``concentrated animal feeding operation'' where the 
Regional Administrator or his/her delegee makes a determination that 
the operation is a significant contributor of pollutants to waters of 
the United States. Similarly, today's proposal would accomplish the 
same objective for the designation of an aquatic animal production 
facility as a ``concentrated'' aquatic animal production facility 
(i.e., the aquatic form of a concentrated animal feeding operation). 
These modifications would also specify that EPA would only designate 
these facilities where pollutants are discharged into waters for which 
EPA establishes a TMDL to provide reasonable assurance that the 
wasteload allocations and load allocations under the TMDL will be 
achieved.
    The Agency invites comments on this proposal, including the 
limitation of the federal designation authority (in authorized States) 
to discharges to waters for which EPA establishes a TMDL.

[[Page 46077]]

B. How Would Silvicultural Activities Be Affected by Today's Proposal?

1. Which Sources Are Currently Excluded From the Definition of a 
``Point Source?'
    EPA is today proposing to modify its current interpretation of the 
term ``point source'' with respect to discharges associated with 
silviculture. The term ``point source'' is defined in regulations at 40 
CFR 122.3 to exclude certain discharges from NPDES requirements. 
Section 122.3(e) specifically excludes ``Any introduction of pollutants 
from nonpoint source agricultural and silvicultural activities, 
including storm water runoff from orchards, cultivated crops, pastures, 
range lands and forest lands.'' As a preliminary matter, the Agency 
notes that, though the regulatory exclusions have existed since the 
1970's, Congress did not enact the specific statutory ratification for 
the agricultural exclusions, for ``return flows from irrigated 
agriculture'' and ``agricultural storm water'' until 1977 and 1987, 
respectively. Neither of the 1977 nor the 1987 amendments provided any 
ratification of the silvicultural exclusions.
    Since that time, the Agency and the States have begun the 
implementation of regulatory controls on intermittent ``wet weather'' 
sources. In 1987, Congress directed EPA to focus on water quality 
concerns associated with storm water. One of the types of storm water 
discharges that the Agency identified as appropriate for regulatory 
control under the NPDES program was storm water discharges associated 
with construction activity, including clearing, grading, and excavation 
activities. See 40 CFR 122.26(b)(14)(x). Storm water discharges 
resulting from land disturbance have significant potential for water 
quality impairment due for example, to excessive sediment loads. 
Sediment adversely affects aquatic ecosystems by reducing light 
penetration, impeding sight-feeding, smothering benthic organisms, 
abrading gills and other sensitive structures, reducing habitat by 
clogging interstitial spaces within a streambed, and reducing the 
intergravel dissolved oxygen by reducing the permeability of the bed 
material. (Everest, F.H., Beschta, J.C., Scrivener, K.V., Koski, J.R., 
Sedell, J.R., and C.J. Cederholm. 1987. Fine Sediment and Salmonid 
Production: A Paradox Streamside Management: Forestry and Fishery 
Interactions, Contract No. 57, Institute of Forest Resources, 
University of Washington, Seattle, WA. pp. 98-142).
    To date, NPDES regulation of storm water discharges associated with 
construction activity has protected water quality from the runoff 
associated with for example, the construction of roads. A gap in 
regulatory coverage exists, however, in that the existing NPDES 
regulations categorically exclude silviculutral road construction and 
maintenance from the definition of ``point source.'' 40 CFR 122.27(b). 
Therefore, the silviculture regulation excludes discharges from forest 
roads from the universe of sources that can be regulated under the 
NPDES permitting program.
2. Are All Discharges From Silivicultural Activities Currently Excluded 
From the NPDES Program?
    Not all discharges from silvicultural activities are currently 
excluded from the definition of a ``point source.'' EPA regulations at 
40 CFR 122.27(b)(1) specify which discharges associated with 
silvicultural activities are point source discharges, namely, 
discharges from rock crushing, gravel washing, log sorting and log 
storage facilities. Discharges from these activities are categorically 
subject to regulation under the NPDES program. EPA regulations at 40 
CFR 122.27(b)(1) also currently identify certain discharges associated 
with silviculture activities that may be ``nonpoint source'' 
discharges, thus, not subject to NPDES permits. These include runoff 
from nursery operations, site preparation, reforestation and subsequent 
cultural treatment, thinning, prescribed burning, pest and fire 
control, harvesting operations, surface drainage, or road construction 
and maintenance. Currently, runoff from these activities is 
categorically excluded from the NPDES program. Also, as noted in the 
regulation, some discharges associated with silvicultural activities 
(such as stream crossing for roads) may involve point source discharges 
of dredged and fill material. In these cases, a CWA section 404 permit 
may be required. See 33 CFR 209.120 and part 233.
    EPA acknowledges that CWA section 404(f)(1) exempts certain 
discharges of dredged or fill material from CWA permitting requirements 
for, among other activities, normal silvicultural activities and the 
construction or maintenance of forest roads. The CWA section 404(f) 
exemption for discharges of dredged and fill material applies to permit 
requirements under both section 404 and section 402, except as provided 
in section 404(f)(2). Section 402, however, does not regulate 
discharges of dredged or fill material. EPA has consistently 
interpreted the apparent inconsistency of including section 402 in the 
section 404(f) ``exemptions'' to reflect the intent that discharges of 
dredged or fill material that are exempt from section 404 permit 
requirements would not be regulated under section 402 instead. EPA has 
not interpreted the inclusion of section 402 in section 404(f) to mean 
that discharges other than dredged or fill material (from the 
activities listed in section 404(f)) are exempt from permit 
requirements under section 402. Today's proposal would not address 
dredged or fill material or otherwise affect the section 404(f) 
exemption. Today's proposal would apply to discharges of pollutants 
other than dredged or fill material, for example, from contaminated 
storm water discharges.
    EPA also notes that the section 404(f) exemption for discharges of 
dredged or fill material associated with the construction or 
maintenance of forest roads is dependent on case-by-case application of 
best management practices. Best management practices provide effective 
mechanisms to address potential adverse impacts to aquatic resources, 
including degradation of physical, chemical, and biological 
characteristics.
3. Which Silivicultural Discharges Would Be Designated Under Today's 
Proposal as Sources Subject to the NPDES Program?
    By today's action, the Agency proposes to remove the regulatory gap 
in coverage with respect to those silvicultural discharges that are 
currently identified as a discrete category of ``non-point sources'' 
excluded from the opportunity for regulation under the NPDES permitting 
program. The only silvicultural discharges, however, that would be 
subject to regulation under the NPDES program on a categorical basis 
are those that are currently regulated as categories today: rock 
crushing; gravel washing, log sorting, and log storage facilities. For 
the sources that were categorically excluded previously (nursery 
operations, site preparation, reforestation and subsequent cultural 
treatment, thinning, prescribed burning, pest and fire control, 
harvesting operations, surface drainage, or road construction and 
maintenance), the categorical exclusion from the definition of ``point 
source'' would be removed. Instead, on a case-by-case basis, selected 
sources could be designated for regulation under the NPDES program for 
storm water discharges under 40 CFR 122.26(a)(v). This case-by-case 
designation, made by the Director or EPA, would be based upon a 
determination that the source contributes to a violation of water

[[Page 46078]]

quality standards or is a significant contributor of pollutants to 
waters of the United States. To make this determination the Director 
could consider the following factors: (1) The location of the discharge 
with respect to waters of the United States; (2) the size of the 
discharge; (3) the quantity and nature of the pollutants discharged to 
waters of the United States; and (4) other relevant factors. 40 CFR 
122.26(a)(v).
4. Why Is EPA Proposing To Remove the Regulatory Exclusion for These 
Silvicultural Discharges?
    Silviculture contributes approximately 3 to 9 percent of nonpoint 
source pollution to the Nation's waters. (Neary, D.G., and J.L. 
Michaele, 1989, Effect of sulfometuron methyl on ground water and 
stream quality in coastal plain forest watersheds. Water Resources 
Bulletin. 25(3):617-623). Twenty-three States have identified 
silviculture as a problem source contributing to nonpoint source 
pollution in their 1996 water quality assessments submitted to EPA 
under CWA section 305(b). (USEPA, 1996, EPA-841-R-97-008 April 1998).
    Several types of silvicultural activities that are currently exempt 
from NPDES regulation may cause significant adverse impacts on water 
quality. These include, but are not limited to, road construction and 
maintenance, site preparation, prescribed burning, clearcutting, and 
harvesting operations. As mentioned above, the construction and 
maintenance of roads, other than those constructed for silvicultural 
operations, are currently subject to NPDES requirements. The 
construction and maintenance of roads related to silvicultural 
activities, however, is exempt. Studies demonstrate that some such road 
construction may create significant water quality problems. Results of 
a study on forest management activities in a small watershed indicated 
that suspended sediment yields increased almost 8 fold in the first 
year following road construction, and two-fold following logging in the 
second year. (B. Anderson and D.F. Potts, 1987, Suspended Sediment and 
Turbidity Following Road Construction and Logging in Western Montana, 
Water Resources Bulletin, Vol. 23, No. 4).
    Mechanical site preparation by large tractors that shear, disk, 
drum-chop, or root-rake a site may result in considerable soil 
disturbance over large areas and has a high potential to deteriorate 
water quality. (Beasley, R.S. 1979. Intensive site preparation and 
sediment loss on steep watersheds in the Gulf Coastal plain. Soil 
Science Society of America Journal. 43(3):412-416). Site preparation 
techniques that result in the removal of vegetation and litter cover, 
soil compaction, exposure or disturbance of the mineral soil, and 
increased stormflows due to decreased infiltration and percolation, all 
can contribute to increases in stream sediment loads. (Golden, M.S., 
C.L. Tuttle, J.S. Kush, and J.M. Bradley, 1984, Forestry activities and 
water quality in Alabama: Effects, recommended practices, and an 
erosion-classified system. Auburn University, Agricultural Experiment 
Station. Bulletin 555). Prescribed burning is another method used to 
prepare sites that may also have effects on water quality as a result 
of increased erosion and the altering of soil properties. Id.
    The actual harvesting of timber can also contribute to water 
quality problems. Results from studies have indicated that 
clearcutting, which is often a method used for timber harvesting, can 
have significant effects on the nutrient levels and temperatures of 
nearby waters. The resulting impacts of a logging operation in the Bull 
Rull Watershed of Oregon include increased nitrate-nitrogen levels for 
up to 7 years after the harvest and an increase in annual stream 
temperatures by 2-3 degrees Celsius for the following 3 years after the 
harvest. (Harr, R.D., and R.L. Fredriksen. 1988. Water quality after 
logging small watersheds within the Bull Run Watershed, Oregon. Water 
Resources Bulletin. 24(5):1103-1111). EPA invites commenters to 
identify and submit additional data to support or refute these 
conclusions.
5. When Would Silviculutral Sources Be Required To Obtain an NPDES 
Permit?
    The effect of today's proposed elimination of the categorical 
silviculture exclusion would be limited. The currently unregulated 
silvicultural sources would only be required to obtain NPDES permit 
authorization (1) upon a case-by-case designation by EPA or the 
authorized State and (2) for the purposes of EPA designation, only for 
sources that discharge to waters for which EPA establishes a TMDL to 
ensure that the wasteload allocations and load allocations under the 
TMDL are achieved. The existing regulations for storm water associated 
with industrial activity (also known as ``Phase I'' storm water 
regulations) issued pursuant to CWA section 402(p)(4)(A), would not 
apply to the discharges that would become subject to regulation by the 
revision to 40 CFR 122.27(b). For example, storm water discharges 
associated with construction and maintenance of forest roads would not 
be considered ``storm water discharges associated with industrial 
activity'' under 40 CFR 122.26(b)(14). The construction of silviculture 
roads would not be a category of storm water discharge that is 
automatically subject to NPDES permitting like other kinds of road 
building. Instead, point source discharges of storm water associated 
with currently unregulated silviculture would only be designated for 
regulation on a case-by-case basis pursuant to CWA section 402(p)(2)(E) 
or 402(p)(6).
    As noted above, EPA proposes that any final rule would limit EPA 
designation of silviculture point sources to discharges to waters for 
which EPA establishes a TMDL because, as a result of proposals 
elsewhere in today's rule, these circumstances would provide a 
considered and focused basis for regulation. The limitation on federal 
designation would apply both in authorized States, as well as in States 
where EPA administers the NPDES program. Given the Agency's limited 
resources, as well as the potentially huge universe of silvicultural 
sources that could become subject to NPDES permitting, today's rule 
focuses those limited EPA resources on these priority waterbodies. In 
States where EPA administers the NPDES program, the Agency does not 
propose silviculture point source designation authority to the same 
extent as would be available to authorized States. Unlike authorized 
States that might designate silviculture point sources outside of the 
TMDL context, EPA would only designate a source when the Agency 
establishes a TMDL itself to ensure that the wasteload allocations and 
load allocations under the TMDL are achieved. In addition, EPA would 
work with and assist those States (where EPA administers the NPDES 
program) in development of their nonpoint source control programs (so 
that the State could provide its own reasonable assurances), rather 
than federally designating silviculture point sources prior to that 
State's establishment of its TMDLs. As noted above, EPA does not 
propose to limit designation by authorized States, who may have other 
opportunities to assure ``reasonable assurances'' that nonpoint sources 
attain load allocations under TMDLs. Additionally, CWA section 510 
preserves more expansive designation authority for States.
    EPA expects that only in extremely rare circumstances would the 
Agency need to exercise its authority to establish an NPDES permit 
requirement for discharges associated with silvicultural activities. 
Indeed, enhanced implementation of State programs and authorities 
designed to

[[Page 46079]]

protect water quality from silvicultural activities may be strong 
enough, in the aggregate, to satisfy ``reasonable assurance'' that 
silvicultural sources would attain load allocations under TMDLs through 
State means alone. EPA would only use the proposed new designation 
authority as a ``last resort'' because EPA lacks authority to regulate 
silvicultural sources directly through other means than through the 
NPDES permitting program. As noted above, States might choose to use 
the new authority more broadly, but EPA would encourage them to focus 
their limited regulatory resources in the same limited manner that EPA 
would use it.
6. How Would States Be Affected by This Proposal?
    State capacity to address silvicultural sources is exemplified by 
the breadth and depth of State programs. A significant number of States 
have comprehensive forest practice management acts, while most others 
have at least some sort of backup authority, such as enforceable water 
quality standards or ``bad actor'' laws. At least ten States administer 
regulatory programs that are as comprehensive as EPA anticipates would 
be imposed if sources were designated under today's proposal for 
regulation under the NPDES permitting program. (Olafson, PV, Cheng 
A.S., and R.D. Moulton. 1995. Regulation of Private Forestry Practices 
by State Governments. University of Minnesota, Minnesota Agricultural 
Experiment Station. Bulletin 605). Nearly all States have developed and 
published BMPs for silviculture, about half of the States conduct 
annual compliance audits to determine landowner use of BMPs, and in 
most States, the State forestry agency plays a role in the State 
nonpoint source plan. (Stuart, Gordon W., 1996. The National 
Association of State Foresters 1996 Progress Report, State Nonpoint 
Source Pollution Control Programs for Silviculture. National 
Association of State Foresters).
    In general, EPA envisions that permits for silvicultural activities 
would be based on an approach emphasizing the development of pollution 
prevention plans and/or specification of best management practices 
rather than quantitative discharge limits for specific pollutants. EPA 
would work with States and stakeholders in developing these permits.
    EPA invites comments on removing the categorical exemption for 
runoff from certain sivicultural activities and on its intention to 
limit federal designation authority to discharges into waters for which 
EPA establishes a TMDL.

IV. Proposed EPA Authority To Reissue State-Issued Expired and 
Administratively-Continued NPDES Permits

    Under the NPDES program regulations, a Regional Administrator may 
review and object to State-issued NPDES permits. The procedures by 
which a Regional Administrator may review and object to these permits 
are found in 40 CFR 123.44. The existing objection authority, under 
section 402(d) of the Act, grants EPA 90 days within which to object to 
a proposed State permit that fails to meet the guidelines and 
requirements of the Act. If a State fails to respond to an EPA 
objection within 90 days of objection, exclusive authority to issue the 
NPDES permit to that discharger passes to EPA.

A. Can EPA Object to State-Issued Expired and Administratively-
Continued Permits?

    Today's proposal describes a new mechanism by which a Regional 
Administrator may trigger the existing review and objection procedures 
in 40 CFR 123.44 for State-issued NPDES permits. EPA is proposing to 
grant the Regional Administrator the discretion to trigger these 
procedures when a State fails to revise an expired, State-issued permit 
that has been administratively-continued for more than 90 days. This 
authority could be triggered when the expired permit authorizes a 
discharge to an impaired waterbody where there is a need for a change 
in the existing permit limits (referred to as an ``environmentally-
significant permit''). The Agency's NPDES regulations require that an 
existing permittee submit a new permit application at least 180 days 
before an existing permit expires. 40 CFR 122.21(d)(2). When a 
permittee has submitted a timely application for renewal, but the State 
Director fails to act on the permittees' application before the 
existing permit expires, State law often provides that the existing 
permit continues in effect by operation of law. The permit remains in 
effect by operation of law until the State takes final action on the 
permittee's application--that is, until the State makes a final 
decision to grant or deny a new permit. This is often referred to as 
administrative continuance. These State laws, like the corresponding 
provisions in 40 CFR 122.6 and the federal Administrative Procedure 
Act, 5 U.S.C. 558(c), aim to protect a permittee who has submitted a 
timely application for renewal. State law protects a permittee from 
losing its authorization to discharge simply because the permit-issuing 
authority has not issued a new permit before the existing permit 
expires.
    Administrative continuance may provide States the necessary 
flexibility without significant adverse impacts on the NPDES permitting 
scheme. However, it may also lead to inappropriate delays in reissuing 
permits that need revision in order to remain in compliance with 
applicable requirements. State administrative-continuance laws 
typically allow an expired permit to remain administratively-continued 
indefinitely. Therefore, a lengthy administrative continuance of a 
permit for a discharge into an impaired water can greatly delay the 
implementation of needed water quality-based effluent limitations, 
including effluent limitations implementing wasteload allocations 
established in a TMDL for an impaired waterbody. Under EPA's existing 
regulations, no mechanism currently exists by which to invoke the 
Agency's permit veto authority to address this situation. Today's 
proposal would provide that needed procedural mechanism.
    This proposed provision is designed to address a subset of expired 
and administratively-continued permits. EPA uses the term backlog to 
describe the larger set of permits that are either expired and 
administratively-continued or have not yet been issued to first time 
applicants. Notwithstanding the Agency's own permit backlog, EPA 
recognizes that many expired permits for discharges into impaired 
waters have not been reissued and expects to exercise this discretion 
in very rare instances involving environmentally-significant permits. 
The Agency intends to use its discretion under the proposed provision 
as one way to help ensure that these permits will be issued in a timely 
manner.

B. How Would EPA Review and Object to a State-Issued Expired and 
Administratively-Continued Permit?

    Today's proposal provides that, if the State failed to submit to 
EPA a draft or proposed permit for a discharge into an impaired 
waterbody within 90 days following the permit expiration date, the 
Regional Administrator would be able to treat the expired and 
administratively-continued permit as equivalent to the State's 
submission of a draft or proposed permit for EPA review under 40 CFR 
123.44. For EPA to trigger this discretionary review mechanism, EPA 
would give the State and the discharger 90-days notice of its intent to 
do so. EPA could provide this notice at any time

[[Page 46080]]

following the 90-day period after permit expiration. The use of this 
new mechanism would be discretionary on the part of EPA. Like a veto of 
a proposed permit under the existing 40 CFR 123.44, this would not 
constitute final agency action until EPA had completed the permit 
issuance process under 40 CFR part 124 and issued or denied the permit. 
District of Columbia v. Schramm, 631 F.2d 854, 816 (D.C. Cir. 1980); 
Mianus River Preservation Comm. v. Administrator, EPA, 541 F.2d 899, 
909 n.24 (2nd Cir. 1976) (discretion). Champion Intl Corp. v. U.S. EPA, 
850 F.2d 182, 187 (4th Cir. 1988) (reviewability).
    EPA believes that the 90 days provided after permit expiration, 
plus the 90 days provided after notice by the Agency that it intends to 
trigger Agency review, plus the 90 days provided for a State to respond 
to Agency objection would provide enough time for a State to reissue an 
expired permit. EPA notes that under the proposed mechanism, the Agency 
would effectively have the authority to extend the period of time for 
the State to reissue a permit beyond the 270 days effectively provided 
under the proposed regulation. This would occur by delaying the date 
upon which the Agency notifies the State of its intent to trigger 
Agency review. Nonetheless, the Agency invites comment on whether EPA 
should provide a grace period of longer than 90 days after the permit 
expires and is administratively-continued before the Agency may provide 
notice that it intends to trigger Agency review.

C. When Would EPA Withdraw its Objection?

    Once the environmentally-significant, administratively-continued 
permit is subject to review under 40 CFR 123.44 procedures, EPA would 
be able to comment on, object to, or recommend changes to the permit. 
If the State, under 40 CFR 123.44(a), submitted a draft or proposed 
permit for EPA review at any time before exclusive authority to issue 
the permit passes to EPA under 40 CFR 123.44(h), EPA would withdraw its 
notice of intent to assume permit authority. At this point, existing 
rules on EPA objection to State-issued permits would govern. Therefore, 
EPA may take any appropriate action, including transmission of comments 
on or possible objection to the new draft or proposed permit submitted 
by the State. Furthermore, the ability to invoke this authority would 
continue until the State issues the final permit. In other words, if a 
State submits a draft or proposed permit that EPA believes resolves all 
of the concerns under the objection, but fails to issue the final 
permit, EPA may in fact, invoke this authority again and object to the 
original (expired and administratively-continued) permit.

D. When Could EPA Invoke This Authority?

    Proposed 40 CFR 123.44(k) describes two situations in which EPA 
would be able to treat an expired and environmentally-significant, 
administratively-continued permit as the State's submission of a permit 
for EPA review under 40 CFR 123.44. This authority could be invoked if 
the discharge is subject to a TMDL, established or approved by EPA, and 
the expired permit does not incorporate the relevant wasteload 
allocations established in the TMDL. Second, this authority could be 
invoked if the permit authorizes a discharge of a pollutant(s) of 
concern (a pollutant(s) for which the waterbody is impaired) to a 
waterbody that does not meet water quality standards and for which EPA 
has not established or approved a TMDL.
    EPA is considering providing explicit language describing that this 
authority is available to the Agency with respect to all expired and 
administratively continued permits which are not consistent with new 
CWA provisions. Examples of such permits, other than those covered by 
today's proposal, would be permits that do not reflect newly-adopted 
water quality standards and effluent limitations guidelines. EPA 
invites comment on these and other circumstances in which it would be 
appropriate for EPA to assert this authority.

E. Would EPA Work With the State Before Invoking This Authority?

    The Agency stresses that the new review mechanism proposed today 
would be used only in those circumstances where other means of working 
with the State to reissue the permit have failed. The Agency may invoke 
this authority where leaving the administratively-continued permit in 
place would frustrate the attainment of water quality standards in 
impaired waterbodies prior to the establishment of a TMDL. The Agency 
may also invoke this authority in instances where leaving the 
administratively-continued permit in place would frustrate the 
implementation of a TMDL. Leaving the administratively-continued permit 
in place in both of these instances would be inconsistent with the 
goals and purposes of the Act. At any time during this process, the 
State is encouraged to explain to EPA the reasons for its failure to 
reissue the expired permit. The Agency will carefully consider any such 
explanation before proceeding with these objection procedures. 
Similarly, the Agency would not expect to depend heavily upon the 
proposed mechanism in States whose administrative continuance laws 
operate for periods of time not much in excess of the 270 days 
effectively provided for reissuance by this proposal.

F. What If a Permit Has Expired but the Permittee Has Not Submitted a 
Timely and Complete Application for Renewal to the State?

    EPA also notes that proposed 40 CFR 123.44(k) would apply only to 
those expired, State-issued permits for which a timely and complete 
application for renewal has been submitted to the State, and for which 
State law has provided for continuation of the expired permit. The new 
provision would not apply to unpermitted discharges or discharges of 
new sources or new dischargers that may or may not have filed a permit 
application. In these cases, existing authority allows the Agency to 
institute judicial or administrative actions against these dischargers 
for discharging without a permit, even if they have submitted an 
application to the State and the State has not issued the permit.

G. What Authority Supports Today's Proposed Changes?

    Section 402(d) of the Act provides EPA with authority to object to 
and veto a proposed permit that violates the requirements of the Act. 
As discussed below, neither the Act nor its legislative history 
expressly speaks to the issue of whether the Agency may object to and 
veto permits that have effectively changed under administrative 
continuance. When Congress has not spoken directly to an issue of 
statutory construction, courts recognize agency discretion to 
reasonably interpret a statute that the Agency is charged to 
administer. Chevron v. Natural Resources Defense Council, 467 U.S. 837 
(1984). Therefore, the Agency has long held that, based on the 
congressional purpose underlying CWA section 402(d), the Agency's 
objection and veto authority exists not only when a permit has been 
formally proposed and submitted to the Agency for review but also when 
a State or a court has taken action to change a permit such that it 
requires new review by the Administrator. Memorandum of July 18, 1973 
from Robert V. Zener, Acting Deputy General Counsel, to Dale S. Bryson, 
Acting Director Enforcement Division, Region V, regarding Extent of EPA 
Concurrence on NPDES Permits; Memorandum of July 3, 1975 from Robert V. 
Zener, General Counsel, to

[[Page 46081]]

James O. McDonald, Director, Enforcement Division, Region V, regarding 
US EPA Authority to Review State Permit Modifications. Similarly, the 
Agency has concluded that administrative continuance of an expired 
permit in the face of newly established wasteload allocations or an 
impairment listing may constitute a circumstance where a new review by 
the Administrator is warranted.
    EPA's authority to promulgate the proposed revision to 40 CFR 
123.44 is a reasonable interpretation of several statutory provisions. 
The authority stems primarily from EPA's responsibility to ensure that 
permits include water quality-based effluent limitations as necessary 
to meet water quality standards. This is especially important in waters 
where TMDLs and wasteload allocations have been established to meet 
applicable water quality standards. Section 303(d) of the Act requires 
EPA to ensure that a TMDL is established for impaired waters. The 
wasteload allocations derived from the TMDL indicate the water quality-
based effluent limitations that permittees discharging to the impaired 
water must meet for the waterbody to meet applicable water quality 
standards. Section 301(b)(1)(C) of the Act directs EPA and the States 
to include water quality-based effluent limitations in NPDES permits 
that will enable the waterbody to meet the applicable water quality 
standards.
    Listing a water under CWA section 303(d) and the subsequent 
establishment of a TMDL, may indicate that new or more stringent water 
quality-based effluent limitations are necessary for point source 
discharges to that waterbody. If so, a lengthy administrative 
continuance of the permit may interfere with the Administrator's 
responsibility to ensure that permits are consistent with the 
requirements of the CWA. The Administrator bears a statutory 
responsibility under CWA section 303(d) to ensure timely establishment 
of TMDLs and an obligation under CWA section 301(b)(1)(C) to ensure 
that permits include water quality-based effluent limits as necessary 
to meet water quality standards. CWA section 501(a) allows the Agency 
to promulgate a regulation that relies upon EPA's authority in CWA 
section 402(d), to prevent a State from avoiding or postponing by 
lengthy administrative-continuance, what otherwise would be required by 
reissuance. The Agency also bears an obligation under CWA section 
402(c)(2) of the Act to ensure that State programs and State-issued 
permits comply with the requirements of the Act. NPDES permits may not 
be issued for period exceeding five years (CWA section 401(b)(1)) and 
should be reviewed and revised in a timely fashion to ensure compliance 
with the CWA and applicable regulations. It would be difficult for the 
Agency to fully discharge its duty under CWA section 402(c)(2) to 
ensure that States not violate the requirements of CWA section 
402(b)(1) if the only statutorily-authorized remedy were program 
withdrawal. Therefore, Congress provided EPA the objection and veto 
authority found in CWA section 402(d). EPA believes that it must be 
able to invoke this authority as provided in the proposed 40 CFR 
123.44(k) to implement the goals of the CWA and the requirements of CWA 
section 402(b).
    EPA also believes that today's proposal is consistent with the 
purpose of CWA section 402(d). The Agency's objection and veto 
authority, under CWA section 402(d), is necessary to correct program 
and permit inadequacies before they have become so systemic that 
program withdrawal is justified. The Agency should reserve withdrawal 
authority for gross inadequacies in a State program. This distinction 
was recognized by Representative Reuss, then chairman of the House 
Conservation and Natural Resources Subcommittee, who explained that:

* * * Federal takeover should not be necessary when EPA finds that 
only a few of the permit applications are being ``improperly'' 
issued. Such total takeover would result in chaos both at the State 
and Federal level. It should be exercised with great care and only 
when there is clear evidence that the entire State program has 
fallen into disrepair.

118 Cong. Rec. 10,240 (1972). Accordingly, he argued that the Agency 
required the authority in CWA Sec. 402(d) to ensure uniform 
implementation of the Act's requirements in individual permits:

    The EPA Administrator should not have to veto a State's total 
program just to get at permits granted improperly to a couple of 
polluters. So we still need a veto on individual permits to check 
those that are improperly granted, and this concept is already 
embodied for interstate waters in section 402 (d) (2) of the House 
bill.

Id. EPA's interpretation of the veto authority conferred in section 
402(d) is consistent with the explanation of the relationship between 
sections 402(d) and 402(c) as articulated in these floor statements. 
Without the authority to object to expired permits on impaired waters, 
EPA's only recourse is program withdrawal. EPA believes this is clearly 
inconsistent with the intent of CWA section 402(d).
    Also, it would make little sense for Congress to have left the 
Agency without discretion under CWA section 402(d) to address, at the 
time of permit expiration, the problem of lengthy administrative 
extension. EPA could have addressed the problem by objecting to and 
vetoing the permit at the time it was initially proposed had the Agency 
known then that the permit would be administratively extended for an 
unreasonable length of time. EPA believes that, instead, the statute 
can reasonably be read under Chevron to allow States to issue 5-year 
permits and provide for administrative continuance without an initial 
EPA objection or veto by preserving the Agency's objection and veto 
authority to ensure that the use of administrative continuance is 
consistent with the statutory scheme that underlies section 303(d) of 
the Act.

H. Conclusion

    It is important to note that the Agency is not here considering 
imposing newly formulated water quality-based effluent limitations 
during the term of the existing permit. Nor would the proposed change 
interfere with the proper operation of State administrative continuance 
laws. The Agency would exercise its discretion to veto an 
administratively-continued permit when the Agency perceives a need to 
issue a permit that reflects water quality-based effluent limitations 
necessary for the water to achieve applicable water quality standards. 
But the permit would remain administratively-continued until the Agency 
or the State issued a new permit (with the wasteload allocation 
incorporated). In no instance would a permittee go without 
authorization to discharge simply for failure of the State to take 
action on the permittees timely application for renewal. The Agency 
invites comment on other statutorily-authorized mechanisms by which the 
Agency might address expired and administratively-continued permits for 
sources discharging to impaired waterbodies. EPA also requests comment 
on whether it should limit the exercise of this authority to impaired 
waters for which a TMDL has not been developed and approved and to 
waters for which a TMDL has been approved and a change to the 
administratively-continued permit is necessary to implement a WLA in 
the approved TMDL.
    EPA recognizes that State agencies have limited resources to 
implement their NPDES programs and often expired, administratively-
continued

[[Page 46082]]

permits are not a result of State unwillingness to reissue permits. EPA 
recognizes that a State may be unable to reissue permits because of 
competing priorities. EPA faces similar resource constraints when it 
issues permits. The Agency also recognizes the State's role as primary 
implementers of the NPDES program. The Agency, after carefully weighing 
these considerations with the risks associated with allowing critical 
permits to remain unrevised, has concluded that the proposal of this 
provision is appropriate.

V. Regulatory Assessment Requirements

A. Regulatory Flexibility Act, as Amended by the Small Business 
Regulatory Enforcement Fairness Act of 1996

    The Regulatory Flexibility Act (RFA), as amended by the Small 
Business Regulatory Enforcement Fairness Act, generally requires an 
agency to prepare a regulatory flexibility analysis for any rule 
subject to notice and comment rulemaking requirements under the 
Administrative Procedure Act or any other statute. Under section 605(b) 
of the RFA, however, if the head of an agency certifies that a rule 
will not have a significant economic impact on a substantial number of 
small entities, the statute does not require the agency to prepare a 
regulatory flexibility analysis. Pursuant to section 605(b), the 
Administrator certifies that this proposal, if adopted, will not have a 
significant economic impact on a substantial number of small entities 
for the reasons explained below. Consequently, EPA has not prepared a 
regulatory flexibility analysis.
    The first of today's proposed new provisions would amend EPA's 
water quality standards regulations to require that States adopt and 
implement antidegradation policies that ensure new and significantly 
expanding dischargers who are large entities on impaired waterbodies 
offset their discharges by more than a 1.5:1 ratio. (The proposal would 
also amend the NPDES regulations to prohibit EPA from issuing an NDPES 
permit unless the discharger complies with applicable antidegradation 
requirements that are to include provisions requiring offsets.) Because 
the provision would require a State (or EPA) to obtain offsets only 
from large entities, there is no impact on small entities.
    The second provision being proposed today would extend EPA's 
current authority under the NPDES regulations to designate and require 
NPDES permits for certain presently unpermitted sources. The proposal 
would authorize EPA under certain conditions to require permits for 
animal feeding operations (AFO), aquatic animal production facilities 
(AAPF) or silvicultural activities. The current regulations provide 
that, where EPA is the permitting authority, EPA may designate an AFO 
or AAPF as a point source requiring an NPDES permit if the Agency 
determines it is a significant contributor of pollution to waters of 
the U.S. The proposed changes would extend this discretionary 
designation authority to authorize EPA action in States with approved 
NPDES programs but only in narrow circumstances. EPA could invoke this 
authority only in those instances where the Agency establishes a TMDL 
and designation is necessary to satisfy the reasonable assurance 
standard under that TMDL.
    In addition, under the current regulations, most silviculture 
stormwater sources are exempt from NPDES regulation. Under the 
proposal, these stormwater sources would continue to be exempt unless 
and until EPA, or a State with an approved NPDES program, designated 
them as subject to NPDES regulation. The effect of today's proposed 
elimination of the categorical silviculture exclusion would be limited. 
The currently unregulated silvicultural sources would only be required 
to obtain NPDES permit authorization (1) upon a case-by-case 
designation by EPA or the authorized State and (2) for the purposes of 
EPA designation, only for sources that discharge to waters for which 
EPA establishes a TMDL to ensure that the wasteload allocations and 
load allocations under the TMDL are achieved. NPDES-authorized States, 
however, might choose to use the new authority more broadly, but EPA 
would encourage them to use it in the same limited manner that EPA 
would use it. In fact, EPA expects that States would exercise this 
authority infrequently, because many States have additional nonpoint 
source authorities, unavailable to EPA, to control discharges from 
these sources. EPA has concluded that this provision would not impose 
significant new costs on a substantial number of small entities.
    EPA assessed the potential costs associated with the permitting of 
newly designated sources under several different scenarios. The results 
of this evaluation show that there would not be a significant impact on 
a substantial number of small entities if this proposal were adopted. 
As a first step in its evaluation, EPA identified those small entities 
potentially affected by the proposal. In identifying these small 
entities, EPA used the definitions of small businesses established by 
the RFA. Small governmental jurisdictions and small organizations (e.g. 
nonprofit organizations) are not expected to be affected by the 
designation provisions. Only businesses in sectors which include 
silviculture, animal feeding operations and aquatic animal production 
facilities would potentially be impacted by this limited extension of 
EPA's (and in the case of silviculture, State) authority to designate 
point sources.
    There would be additional costs to small entities if EPA, following 
promulgation of the designation provision, were to designate a 
particular discharger for permitting. As noted previously, this would 
occur only when a State fails to submit a TMDL or submits a TMDL that 
EPA finds will not reasonably assure compliance with the load 
allocations. EPA assumes that States will make every effort to develop 
effective TMDLs and employ their existing programs and legal authority 
to ensure compliance. Currently, every State has a nonpoint source 
control program which in many cases includes legal authority to address 
those industrial sectors that are the focus of the limited designation 
authority (AFOs, silviculture activities and aquaculture). EPA also 
expects further enhancements to State point and nonpoint source control 
programs as the States develop their TMDLs. In these circumstances, EPA 
can predict with a high degree of confidence that the occasion on which 
it may need to exercise its proposed new designation authority will not 
be great. EPA, however, cannot predict specifically how often this 
authority may be used, or exactly how often States will use their new 
designation authority with respect to silviculture.
    The analysis of potentially regulated silviculture entities was 
based on a modified sales test that compared the estimated per acre 
cost of compliance with per acre sales revenue. The results show that 
the potential costs of implementing BMPs per acre are less than 1% of 
sales revenues from one acre of timber. Both compliance cost based on 
anticipated BMPs and sales per acre were calculated regionally, to 
account for regional variations in timber practices and timber sales 
values. This analysis concluded that both logging operations and timber 
land owners (i.e. nurseries, etc.) are expected to experience costs of 
much less than 1% of sales in every scenario tested.
    While EPA's exercise of the limited new proposed designation 
authority for silviculture, may at some point in the future, result in 
the imposition of these

[[Page 46083]]

additional costs on dischargers, including small entities, it is the 
Agency's view that adoption of the provisions giving EPA and the States 
authority to subject these sources to NPDES permitting requirements 
does not impose additional costs on dischargers now. Further, because 
the proposed authority is discretionary, it is not possible to identify 
which nonpoint source dischargers, if any, would be designated as point 
sources and required to obtain a permit. No sources would be 
automatically so designated. Only in the event EPA or a State acted to 
designate a particular discharger would there be any costs to the 
discharger.
    In analyzing potentially regulated animal feeding operations 
(AFOs), EPA performed a sales test. The analysis determined that the 
average potential costs of permit compliance are less than 1% of most 
small entity sales revenue. However, this analysis was constrained by 
two factors. First, the sales test relied on revenue data by farm, 
which resulted in an underestimate of sales revenue from small 
operations that own more than one farm and also underestimated sales 
revenue from operations that receive revenue from more than one type of 
source (sell more than one type of item). Second, EPA used the more 
complete State 305(b) lists of impaired waterbodies (rather than 303(d) 
lists) to estimate the number of entities that might be designated 
under the proposed rule. Because waters listed as impaired under 305(b) 
may still be attaining water quality standards and thus not require a 
TMDL, this overestimates the number of entities used in EPA's 
assessment. AFOs located on waterbodies that do attain standards are 
not affected by today's proposal. Taking into account these 
constraints, EPA's best estimate is that very few small entities (less 
than 100 annually) would experience impacts greater than one percent of 
sales revenue, and even fewer will experience impacts of greater than 
three percent of sales revenue as a result of being designated. 
Therefore, EPA's evaluation shows that there would not be a significant 
impact on a substantial number of small AFOs.
    The analysis of potentially regulated Aquatic Animal Production 
Facilities (AAPFs) indicates that very few are located on impaired 
waterbodies. EPA estimates that only two to ten operations could 
potentially be designated annually. If these entities are designated 
however, a sales test indicates that a few small entities may 
experience permit compliance costs of approximately 4% of sales 
revenue. Since so few AAPFs discharge to impaired waterbodies, EPA's 
evaluation shows that there would not be a significant impact to a 
substantial number of small AAPFs.
    In the case of animal feeding operations and aquatic projects, the 
proposed authority merely would backstop existing State authority under 
the Clean Water Act. Thus, EPA designation authority would not impose 
any new costs on nonpoint source dischargers potentially subject to 
designation because any costs to the potentially designated sources 
that would result if EPA exercised its designation authority are the 
same costs that would result if the State exercised its designation 
authority under existing State and Federal laws and regulations. Thus, 
the costs to animal feeding and aquatic projects would be the same 
whether the State or EPA designated the source as subject to NPDES.
    Moreover, when and how often EPA might exercise the proposed 
authority is unpredictable for several reasons. First, the proposal 
would authorize EPA action in only a limited set of circumstances: (1) 
Where a State has either failed to submit a TMDL (or submitted a 
deficient TMDL); (2) EPA has established a TMDL for the water body; and 
(3) EPA determines that the nonpoint source is a significant 
contributor of pollution and that designation (and permitting) of the 
source are needed to ensure that load and waste load allocation are 
met. EPA cannot predict when it may be required to establish TMDLs. 
However, the Agency's expectations are that States with approved NPDES 
programs will be submitting approvable TMDLs with load and waste load 
allocations that will reflect achievement of the TMDLs, and that EPA 
thus will need to exercise its designation authority infrequently. 
Because EPA does not know for which water bodies in which States it 
will need to establish TMDLs, it cannot predict what nonpoint source 
dischargers it may need to consider for designation under the proposed 
authority.
    These intervening steps between today's proposal and any exercise 
of EPA's authority (if the rule were promulgated as proposed) 
underscore EPA's position that adoption of the designation provisions 
would not impose significant costs on a substantial number of small 
entities. Promulgation of the proposal is only one step in a series of 
actions that must occur before any costs are imposed on any particular 
nonpoint source discharger.
    The third provision in the proposal would authorize EPA, in certain 
circumstances, to object to state-issued permits that have not been 
reissued following the expiration of their 5-year term. Where water 
quality standards (or applicable effluent limitations guidelines) 
change during a permit term, the permittee is generally protected 
during the permit term against new or more stringent permit conditions 
necessary to implement the new water quality standards or effluent 
limitations guidelines, until a new permit is issued. In most cases, 
permittees submit timely applications for renewal and permitting 
authorities reissue these permits in a timely manner. In some cases, 
authorized States may fail to reissue NPDES permits at the end of their 
5-year term as is currently required, and the existing permits continue 
in effect under general principles of administrative law. 
(Administrative continuance protects the permittee who has submitted a 
timely application for renewal from being penalized for discharging 
without a permit.)
    This proposal, if promulgated, would authorize EPA to take action 
to reissue an expired permit in those cases where the State failed to 
reissue the permit after a specified period. EPA's exercise of this 
authority is limited to circumstances in which a permit authorizes 
discharges to impaired waterbodies or the permit does not currently 
contain limits consistent with an applicable waste load allocation in 
an EPA approved or established TMDL. While EPA assumes that authorized 
States will expeditiously reissue permits with the required water 
quality-based effluent limits, where States fail to reissue such 
permits, EPA would use this new authority to issue such permits in a 
timely manner.
    This provision also would not impose any additional costs on 
dischargers, including small entities. Because as a matter of law, the 
discharger's new permit, when issued, already must include any 
applicable new or more stringent conditions. Therefore, the effect of 
the proposed change is, at most, to accelerate the timing of the 
legally-mandated compliance with the new conditions. Consequently, EPA 
has concluded that adoption of a proposal to authorize future 
discretionary action by EPA would not result in the imposition of any 
new costs on small entities.
    For the reasons explained herein, EPA concluded that it could 
properly certify the proposal. See e.g., United States Distribution 
Companies v. FERC, 88 F.3d 1105, 1170 (D.C. Cir. 1996). (``[N]o 
[regulatory flexibility] analysis is necessary when an agency 
determines that the rule will not have a significant economic impact on 
a substantial number of small entities that are subject to the 
requirements of the rule,'' United

[[Page 46084]]

Distribution at 1170, quoting Mid-Tex Elec. Co-op v. FERC, 773 F.2d 
327, 342 (D.C. Cir. 1985) (emphasis added by United Distribution 
court); see also Motor & Equip. Mrfrs. Ass'n v. Nichols, 142 F.3d 449, 
467 & n.18 (D.C. Cir. 1998) (the RFA imposes no obligation on an agency 
to conduct a small entity analysis on entities it does not regulate); 
American Trucking Association, Inc. v. EPA, 175 F.3d 1027 (D.C. Cir. 
1999) (the RFA requires an agency to prepare a small entity impact 
analysis only of the effects on those entities that are subject to the 
requirements of a rule or directly regulated by a rule). Additional 
information supporting EPA's assessment is described in the 
administrative record supporting the proposal.

B. Executive Order 12866

    Under Executive Order 12866 (58 FR 51735, (October 4, 1993)), the 
Agency must determine whether the regulatory action is ``significant'' 
and therefore subject to Office of Management and Budget (OMB) review 
and the requirements of the Executive Order. The Order defines 
``significant regulatory action'' as one that is likely to result in a 
rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or Tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    Pursuant to terms of Executive Order 12866, it has been determined 
that this rule is a ``significant regulatory action.'' As such, this 
action was submitted to OMB for review. Changes made in response to OMB 
suggestions or recommendations will be documented in the public record.

C. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local and Tribal 
governments and the private sector. Under section 202 of the UMRA, EPA 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal Mandates'' that 
may result in expenditures to State, local, and Tribal governments, in 
the aggregate, or to the private sector, of $100 million or more in any 
one year. Before promulgating an EPA rule for which a written statement 
is needed, section 205 of the UMRA generally requires EPA to identify 
and consider a reasonable number of regulatory alternatives and adopt 
the least costly, most cost-effective or least burdensome alternative 
that achieves the objectives of the rule. The provisions of section 205 
do not apply when they are inconsistent with applicable law. Moreover, 
section 205 allows EPA to adopt an alternative other than the least 
costly, most cost-effective or least burdensome alternative if the 
Administrator publishes with the rule an explanation why that 
alternative was not adopted. Before EPA establishes any regulatory 
requirements that may significantly or uniquely affect small 
governments, including Tribal governments, it must have developed under 
section 203 of the UMRA a small government agency plan. The plan must 
provide for notifying potentially affected small governments, enabling 
officials of affected small governments to have meaningful and timely 
input in the development of EPA regulatory proposals with significant 
Federal intergovernmental mandates, and informing, educating, and 
advising small governments on compliance with the regulatory 
requirements.
    EPA has determined that this proposed rule does not contain a 
Federal mandate that may result in expenditures of $100 million or more 
for State, local, and tribal governments, in the aggregate, or the 
private sector in any one year. The costs to State, local and tribal 
governments, in the aggregate, or the private sector in any one year to 
implement the requirements in today's proposal are not expected to 
exceed $65.2 million in any one year. The total cost to State, local 
and tribal governments is not expected to exceed $0.96 million in any 
one year, with a majority of these costs born by State government. The 
remaining $64.24 million is expected to be born by the private sector. 
Thus, today's proposed rule is not subject to the requirements of 
section 202 and 205 of UMRA.
    A detailed discussion of the costs and impacts of the proposed 
rule, and the methodologies used to assess them, are included in the 
Analysis of the Incremental Cost of Proposed Revisions to the NPDES 
Permit and Water Quality Standards Rules which is available in the 
docket for this rule-making. While the analysis is based on the best 
data currently available to the agency, it necessarily includes 
assumptions where needed to fill data gaps. One such assumption is the 
percentage of large construction sites that would be required to obtain 
offsets under the proposed rule. Based on the percentage of waters 
identified in State 305(b) reports where construction activity 
contributed to impairment, EPA has estimated that 2-3% of large 
construction sites would discharge pollutants of concern to impaired 
waters and thus be required to obtain offsets. EPA requests comment on 
this assumption and any data that commenters may have that would 
support their comments. EPA also requests comment more generally on all 
of the assumptions and methodologies used in the economic analysis.
    EPA has determined that this proposed rule contains no regulatory 
requirements that might significantly or uniquely impact small 
governments. As explained in the Regulatory Flexibility Act section of 
the preamble, this proposed rule establishes no requirements applicable 
to small governmental entities. Further, regulated entities are not 
expected to negatively impact small governmental entities. Therefore, 
this proposed rule will not significantly affect small governmental 
entities.
    In addition, today's proposal will not significantly or uniquely 
affect Tribal governments. Currently, there are only fifteen Tribes 
with EPA approved or promulgated water quality standards and there are 
no Tribes authorized to administer the NPDES program or to establish 
TMDLs under section 303(d). As a result, this proposal will not 
significantly or uniquely affect Tribal governments. However, as Tribes 
continue to build their Clean Water Act capacity and establish water 
quality programs, more Tribes are likely to adopt water quality 
standards and seek approval to administer the NPDES program and 
establish TMDLs. If today's proposed rulemakings were to result in 
changes to these future Tribal water quality programs, the costs for 
Tribal governments would be analyzed. Moreover, whether or not Tribes 
choose to do so, they have a strong interest in protecting water 
quality on Tribal lands. Thus, even though today's proposal will not 
significantly or uniquely affect Tribal governments, Tribes may in the 
future be subject to the requirements in today's proposal. Recognizing 
the need to consider the views and concerns of Tribal governments in 
any comprehensive evaluation of how

[[Page 46085]]

TMDLs are established, EPA determined it was appropriate to include a 
Tribal representative on the TMDL FACA Committee. The committee's final 
report addresses Tribal issues, recommending that EPA increase efforts 
to educate Tribes about water quality programs, including TMDLs, and 
ensure that EPA and State water quality staff respect the government-
to-government relationship with Tribes in all TMDL activities.

D. Paperwork Reduction Act

    The information collection requirements in this proposed rule have 
been submitted for approval to the Office of Management and Budget 
(OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. An 
Information Collection Request (ICR) document has been prepared by EPA 
(ICR No.1920.01) and a copy may be obtained from Sandy Farmer, OP 
Regulatory Information Division; U.S. Environmental Protection Agency 
(2137); 401 M Street, SW; Washington, DC 20460 or by calling (202) 260-
2740.
    The offset provision will result in either the modification of 
NPDES permits, the issuance of new NPDES permits, or the issuance of an 
individual NPDES permit in lieu of coverage under a General Permit. The 
designation provisions will result in the issuance of NPDES permits 
(either individually or under a General Permit) to operations that 
would not have previously have required to obtain them. The NPDES 
permitting authorities, in the form of NPDES authorized States and 
Territories or EPA Regions in Non-NPDES authorized States and 
Territories, intend to use the information collected to set appropriate 
permit conditions, track discharges, and assess permit compliance. EPA 
has examined available databases and determined that these databases 
revealed no duplicate requirements. EPA has concluded that no 
government information collection activity duplicates the information 
requested by this and, therefore, it has no other way to obtain the 
information. Therefore, these responses are mandatory. In addition to 
the NPDES permitting authorities, EPA's Office of Wastewater Management 
(Office of Water), OECA, and environmental groups will most likely use 
the information collected to assess the regulated community's level of 
compliance and help evaluate the effectiveness of these provisions. 
Although highly unlikely, permit applications may contain confidential 
business information. If this is the case, the respondent may request 
that such information be treated as confidential. All confidential data 
will be handled in accordance with 40 CFR 122.7, 40 CFR part 2, and 
EPA's Security Manual Part III, Chapter 9, dated August 9, 1976. 
However, CWA section 308(b) specifically states that effluent data may 
not be treated as confidential.
    The total projected burden associated with the information 
collection requirements of this proposal is estimated to be 71,996 
hours annually and to impose an estimated cost of $2,415,320 annually. 
The annual burden to each private sector respondent for collecting 
information required by the rule is estimated to be: (1) An average of 
23 hours per each construction respondent; (2) an average of 28.6 hours 
per other storm water respondent; (3) an average of 55 hours per 
respondent requiring process water offsets; (4) an average of 84 hours 
per silviculture activity that is designated; (5) an average of 47 
hours per animal feeding operation that is designated; and (6) an 
average of 88 hours per aquatic animal production facility that is 
designated. The annual burden to NPDES authorized States and 
Territories is (1) An average of 1,040 hours per general permit issued; 
(2) an average of 1.5 hours to process and review each storm water NOI; 
(3) an average of 2 hours to process and review each submitted or 
updated silviculture or animal feeding operation NOI; and (4) an 
average of 80 hours to issue an NPDES permit to designated aquatic 
animal production facility. The Agency's burden is estimated to be 
4,646 hours annually. These burden estimates include the time required 
to review the instructions, search existing data sources, gather and 
maintain (usually in electronic databases) all necessary data, and 
complete and review the information required to be collected.
    Burden means the total time, effort, or financial resources 
expended by persons to generate, maintain, retain, or disclose or 
provide information to or for a Federal agency. This includes the time 
needed to review instructions; develop, acquire, install, and utilize 
technology and systems for the purposes of collecting, validating, and 
verifying information, processing and maintaining information, and 
disclosing and providing information; adjust the existing ways to 
comply with any previously applicable instructions and requirements; 
train personnel to be able to respond to a collection of information; 
search data sources; complete and review the collection of information; 
and transmit or otherwise disclose the information.
    An Agency may not conduct or sponsor, and a person is not required 
to respond to a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations are listed in 40 CFR part 9 and 48 CFR Chapter 15.
    Comments are requested on EPA's need for this information, the 
accuracy of the provided burden estimates, and any suggested methods 
for minimizing respondent burden, including through the use of 
automated collection techniques. Send comments on the ICR to the 
Director, OP Regulatory Information Division; U.S. Environmental 
Protection Agency (2137); 401 M Street, SW; Washington, DC 20460; and 
to the Office of Information and Regulatory Affairs, Office of 
Management and Budget, 725 17th Street, NW; Washington, DC 20503, 
marked ``Attention: Desk Officer for EPA.'' Include the ICR number in 
any correspondence. Since OMB is required to make a decision concerning 
the ICR between 30 and 60 days after August 23, 1999, a comment to OMB 
is best assured of having its full effect if OMB receives it by 
September 22, 1999. The final rule will respond to any OMB or public 
comments on the information collection requirements contained in this 
proposal.

E. Executive Orders on Federalism

    Under Executive Order 12875, ``Enhancing the Intergovernmental 
Partnership,'' EPA may not issue a regulation that is not required by 
statute and that creates a mandate upon a State, local, or tribal 
government, unless the Federal government provides the funds necessary 
to pay the direct compliance costs incurred by those governments, or 
EPA consults with those governments. If EPA complies by consulting, 
Executive Order 12875 requires EPA to provide to OMB a description of 
the extent of EPA's prior consultation with representatives of affected 
State, local, and tribal governments, the nature of their concerns, any 
written communications from the governments, and a statement supporting 
the need to issue the regulation. In addition, Executive Order 12875 
requires EPA to develop an effective process permitting elected 
officials and other representatives of State, local and tribal 
governments ``to provide meaningful and timely input in the development 
of regulatory proposals containing significant unfunded mandates.''
    EPA has concluded that this proposed rule will create a mandate on 
State governments and authorized Tribes and that the Federal government 
will not provide all of the funding necessary to pay the direct costs 
incurred by the State governments and authorized Tribes in complying 
with the mandate.

[[Page 46086]]

However, EPA has substantially increased funding for States, 
Territories, and authorized Tribes through the State-matched CWA 
section 106 and 319 grant programs. In developing this proposed rule, 
EPA consulted with State, local, and tribal governments to enable them 
to provide meaningful and timely input in the development of this rule.
    Before beginning to develop today's proposal, EPA convened a 
Federal Advisory Committee to make recommendations for improving the 
efficiency and effectiveness of TMDLs. The TMDL FACA Committee was 
comprised of 20 members, including four senior level State officials, 
an elected local official, and a Tribal consortium representative. Over 
a period of one and one-half years, the TMDL FACA Committee held six 
meetings at locations throughout the country. These meetings were open 
to the general public, as well as representatives of State, local, and 
Tribal governments, and all included public comment sessions. The TMDL 
FACA Committee focused its deliberations on four broad issue areas: 
identification and listing of waterbodies; development and approval of 
TMDLs; EPA management and oversight; and science and tools. On July 28, 
1998, the TMDL FACA Committee submitted its final report to EPA 
containing more than 100 consensus recommendations for changes and 
improvements to TMDLs. As explained throughout this preamble, EPA 
carefully reviewed the TMDL FACA Committee's consensus recommendations 
and incorporated, in whole or in part, most of those recommendations in 
this proposal.
    Following completion of the FACA Committee process, EPA continued 
to meet with State and local government officials to seek their views 
on needed changes to the Water Quality Standards and NPDES regulations. 
While expressing support for many of the proposed changes being 
considered by EPA, State officials and their representatives also 
expressed general concerns about the capacity of State governments to 
carry out the new requirements proposed today. In particular, States 
were concerned about writing NPDES permits which satisfy the offset 
requirements, in the absence of a well established market for pollutant 
trading. The proposed regulation establishes some explicit requirements 
for States to use in establishing an offset sufficient to satisfy the 
offset requirements. States were also concerned about the role of EPA 
in reissuing State-issued expired and administratively-continued NPDES 
permits. EPA determined that the exercise of its authority in limited 
circumstances is necessary to assure reasonable further progress in 
impaired waterbodies prior to the establishment of a TMDL and to 
provide reasonable assurance that TMDLs will be implemented. In 
developing today's proposal, EPA considered the concerns of State and 
local governments and determined the need to revise the NPDES and Water 
Quality Standards regulations to provide opportunities for further 
progress toward meeting water quality standards in impaired waterbodies 
and to provide reasonable assurance of effective TMDL development. 
Today's proposal improves the effectiveness, efficiency and pace of 
water quality improvement and TMDL establishment.
    Finally, while there is a new executive order on federalism, it 
will not go into effect for ninety days. In the interim, under the 
current E.O. 12612 on federalism, this rule does not have a substantial 
direct effect upon States, upon the relationship between the national 
government and the States, or upon the distribution of power and 
responsibilities among the various levels of government. The only 
provisions in this rule that directly affect States are those requiring 
States to adopt and implement antidegradation policies that ensure new 
and significantly expanding dischargers who are large entities on 
impaired waterbodies offset any proposed increases in their discharges 
by more than a 1.5:1 ratio. These provisions are not substantial in the 
context of State's overall water quality and permitting program. States 
already are required to have, and do have, antidegradation policies. 
This rule simply would require States to add one discrete provision to 
their existing policies. With respect to the remaining provisions, 
authorizing EPA to designate certain sources as point sources and to 
reissue expired permits where the State failed to do so, these 
provisions authorize EPA to act only where the State has failed to act. 
Accordingly, these provisions will not have a substantial direct effect 
on States or on intergovernmental relationships or responsibilities.

F. Executive Order 13084: Consultation and Coordination With Indian 
Tribal Governments

    Under Executive Order 13084, EPA may not issue a regulation that is 
not required by statute, that significantly or uniquely affects the 
communities of Indian tribal governments, and that imposes substantial 
direct compliance costs on those communities, unless the Federal 
government provides the funds necessary to pay the direct compliance 
costs incurred by the tribal governments, or EPA consults with these 
governments. If EPA complies by consulting, Executive Order 13084 
requires EPA to provide to OMB, in a separately identified section of 
the preamble to the rule, a description of the extent of EPA's prior 
consultation with representatives of affected tribal governments, a 
summary of the nature of their concerns, and a statement supporting the 
need to issue the regulation. In addition, Executive Order 13084 
requires EPA to develop an effective process permitting elected and 
other representatives of Indian tribal governments ``to provide 
meaningful and timely input in the development of regulatory policies 
on matters that significantly or uniquely affect their communities.''
    As explained above in the discussion of UMRA requirements, today's 
rule proposal does not significantly or uniquely affect the communities 
of Indian tribal governments. Accordingly, the requirements of Section 
3(b) of Executive Order 13084 do not apply to this proposed rule.

G. Executive Order 13045: Protection of Children From Environmental 
Health Risks and Safety Risks

    Executive Order 13045, ``Protection of Children from Environmental 
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997) applies 
to any rule that: (1) Is determined to be ``economically significant'' 
as defined under Executive Order 12866, and (2) concerns an 
environmental health or safety risk that EPA has reason to believe may 
have a disproportionate effect on children. If the regulatory action 
meets both criteria, the Agency must evaluate the environmental health 
or safety effects of the planned rule on children, and explain why the 
planned regulation is preferable to other potentially effective and 
reasonably feasible alternatives considered by the Agency.
    This rule is not subject to the Executive Order because it is not 
economically significant as defined in Executive Order 12866.

H. National Technology Transfer and Advancement Act

    Under section 12(d) of the National Technology Transfer and 
Advancement Act (NTTAA), EPA is required to use voluntary consensus 
standards in its regulatory activities unless to do so would be 
inconsistent with applicable law or is otherwise impractical. Voluntary 
consensus standards are technical standards (e.g., materials

[[Page 46087]]

specifications, test methods, sampling procedures, and business 
practices) that are developed or adopted by voluntary consensus 
standards bodies. Where available and potentially applicable voluntary 
consensus standards are not used by EPA, the Act requires the EPA to 
provide Congress, through OMB, an explanation of the reasons for not 
using such standards.
    This proposed rule does not involve any technical standards. 
Therefore, EPA is not considering the use of any voluntary consensus 
standards. EPA welcomes comments on this aspect of the proposed 
rulemaking and specifically, EPA invites the public to identify any 
potentially applicable voluntary consensus standards and to explain why 
such standards should be used in this regulation.

List of Subjects

40 CFR Part 122

    Environmental protection, Administrative practice and procedure, 
Confidential business information, Hazardous substances, Reporting and 
recordkeeping requirements, Water pollution control.

40 CFR Part 123

    Environmental protection, Administrative practice and procedure, 
Confidential business information, Hazardous substances, Indians-lands, 
Intergovernmental relations, Penalities, Reporting and recordkeeping 
requirements, Water pollution control.

40 CFR Part 124

    Environmental protection, Administrative practice and procedure, 
Hazardous substances, Indians-lands, Reporting and recordkeeping 
requirements, Water pollution control, Water supply.

40 CFR Part 131

    Reporting and recordkeeping requirements, Water pollution control.

    Dated: August 12, 1999.
Carol M. Browner,
Administrator.
    For the reasons set forth in the preamble, EPA proposes to amend 40 
CFR Parts 122, 123, 124, and 131 as follows:

PART 122--EPA ADMINISTERED PERMIT PROGRAMS: THE NATIONAL POLLUTANT 
DISCHARGE ELIMINATION SYSTEM

    1. The authority for part 122 continues to read as follows:

    Authority: The Clean Water Act, 33 U.S.C. 1251 et seq.

    2. Amend Sec. 122.2 as follows:
    a. Adding the definition of ``Existing discharger;''
    b. In the definition of ``New discharger,'' revising the 
introductory text and paragraphs (a) through (d);
    c. Adding the definition of ``Significant expansion.''


Sec. 122.2  Definitions.

* * * * *
    Existing discharger means any building, structure (including an 
outfall or a pipeline), facility, or installation:
    (a) From which there is a ``discharge of pollutants'' to ``waters 
of the United States'' that has received or been permitted under a 
finally effective NPDES permit; or
    (b) From which pollutants have been and are currently added to 
waters of the United States that has never received nor been permitted 
under a finally effective NPDES permit, but only if it becomes subject 
to NPDES permitting requirements pursuant to a regulatory designation 
(on an individual or categorical basis).
    (c) This term includes those dischargers who move an outfall(s) 
within the ``same body of water.'' In determining whether an outfall is 
moved within the ``same body of water'' as its original location, the 
permitting authority should consider whether:
    (1) The background concentration of the pollutant in the receiving 
water (excluding any amount of the pollutant in the facility's 
discharge) is similar at and between both outfall points;
    (2) There is a direct hydrological connection between outfall 
points; and
    (3) Water quality characteristics (e.g., temperature, pH, hardness) 
are similar at and between both outfall points.
* * * * *
    New discharger means any building, structure (including an outfall 
or a pipeline), facility, or installation:
    (a) From which there is or may be a ``discharge of pollutants' to 
``waters of the United States;''
    (b) Which has never received or been permitted under a finally 
effective NPDES permit; and
    (c) Which is not an existing discharger.
    (d) This term includes those dischargers who move an outfall(s) to 
another location not within the same body of water.
* * * * *
    Significant expansion means a twenty percent or greater increase in 
loadings above the discharger's current permit limit.
* * * * *
    3. In Sec. 122.4, add new paragraph (j) to read as follows:


Sec. 122.4  Prohibitions (applicable to State NPDES programs, see 
Sec. 123.25).

* * * * *
    (j)(1) To a new discharger or existing discharger undergoing a 
significant expansion unless the discharger complies with the 
antidegradation provisions of State water quality standards applicable 
to such waters, including the antidegradation provisions adopted 
pursuant to 40 CFR 131.12(a)(1)(ii).
    (2) Where a permit is issued subject to paragraph (j)(1) of this 
section and where the discharger is required to obtain and maintain 
pollutant load reductions required as offsets to meet antidegradation 
requirements adopted pursuant to 40 CFR 131.12(a)(1)(ii), the 
discharger must also comply with each of the following:
    (i) The pollutant load reductions must be achieved from a source(s) 
of the pollutant(s) for which the waterbody is impaired and that the 
new or existing discharger undergoing a significant expansion is 
required to offset;
    (ii) The pollutant load reductions must be achieved from a 
source(s) located on the same waterbody as the discharge from the new 
discharger or existing discharger undergoing a significant expansion;
    (iii) The pollutant load reductions must be the result of pollutant 
control measures implemented by, or secured and assured by, the new 
discharger or existing discharger undergoing a significant expansion 
(credit will not be give for reductions already required for some other 
reason);
    (iv)(A) The pollutant load reductions must be achieved on or before 
the date the discharge commences and remain in place until
    (1) A TMDL for the waterbody is approved or established by EPA, and 
the discharger's permit reflects its wasteload allocation under the 
TMDL; or
    (2) The discharger ceases to discharge the pollutant(s) causing the 
impairment;
    (B) The Director has the discretion not to require that the 
pollutant load reductions be achieved on or before the date the 
discharge commences, but as soon thereafter as possible, in exchange 
for requiring the discharger to obtain pollutant load reductions by an 
amount of at least twice the amount of the new or expanded discharge.
    (v) Where a discharger obtains pollutant load reductions from an 
existing point source(s), the NPDES permit(s) for the existing point 
source(s) must be modified to reflect those reductions on or before the 
date the permit is issued to the new discharger

[[Page 46088]]

or existing discharger undergoing a significant expansion; and
    (vi) Where a discharger obtains pollutant load reductions from an 
existing nonpoint source(s), the discharger's permit must include any 
conditions, including the offset requirements and any accompanying 
monitoring and reporting requirements, necessary to ensure continued 
achievement of the pollutant load reductions from the nonpoint 
source(s).
    (3) An explanation of the development of the requirements for the 
discharger to meet the criteria of paragraphs (j)(1) and (2) of this 
section must be included in the fact sheet or statement of basis for 
the permit required under 40 CFR 124.7 and 124.8.
    (4) The terms ``new discharger'' and ``significant expansion'' are 
defined in Sec. 122.2 of this part.
    4. Amend Sec. 122.23 to revise paragraphs (c)(1) introductory text 
and (c)(3) and to add new paragraph (c)(4) to read as follows:


Sec. 122.23  Concentrated animal feeding operations (applicable to 
State NPDES programs, see Sec. 123.25).

* * * * *
    (c) Case-by-case designation of concentrated animal feeding 
operations. (1) The Director, or in States with approved NPDES programs 
either the Director or the EPA Regional Administrator, may designate 
any animal feeding operation as a concentrated animal feeding operation 
upon determining that it is a significant contributor of pollution to 
the waters of the United States. In making this designation the 
Director shall consider the following factors:
* * * * *
    (3) A permit application shall not be required from a concentrated 
animal feeding operation designated under this paragraph until the 
Director, or in States with approved NPDES programs, either the 
Director or the EPA Regional Administrator, has conducted an on-site 
inspection of the operation and determined that the operation should 
and could be regulated under the permit program.
    (4) In States with approved NPDES programs, EPA shall only 
designate animal feeding operations where pollutants are discharged 
into waters for which EPA establishes a TMDL to ensure that wasteload 
allocations and load allocations under the TMDL are achieved.
    5. Amend Sec. 122.24 to revise paragraphs (c)(1) and (c)(2) 
introductory text and to add new paragraph (c)(3) to read as follows:


Sec. 122.24  Concentrated aquatic animal production facilities 
(applicable to State NPDES programs, see Sec. 123.25).

* * * * *
    (c) Case-by-case designation of concentrated aquatic animal 
production facilities. (1) The Director, or in States with approved 
NPDES programs, either the Director or the EPA Regional Administrator, 
may designate any warm or cold water aquatic animal production facility 
as a concentrated aquatic animal production facility upon determining 
that it is a significant contributor of pollution to waters of the 
United States. In making this designation the Director shall consider 
the following factors:
* * * * *
    (2) A permit application shall not be required from a concentrated 
aquatic animal production facility designated under this paragraph 
until the Director, or in States with approved NPDES programs, either 
the Director or the EPA Regional Administrator, has conducted on-site 
inspection of the facility and has determined that the facility should 
and could be regulated under the permit program.
    (3) In States with approved NPDES programs, EPA shall only 
designate aquatic animal production facilities where pollutants are 
discharged into waters for which EPA establishes a TMDL to ensure that 
the wasteload allocations and load allocations under the TMDL are 
achieved.
    6. Amend Sec. 122.26 to revise paragraphs (a)(1)(v) and (b)(14)(x) 
to read as follows:


Sec. 122.26  Storm water discharges (applicable to State NPDES 
programs, see Sec. 123.25).

    (a) * * *
    (1) * * *
    (v) A discharge which the Director, or in States with approved 
NPDES programs, either the Director or the EPA Regional Administrator, 
determines to contribute to a violation of a water quality standard or 
is a significant contributor of pollutants to waters of the United 
States. This designation may include a discharge from any conveyance or 
system of conveyances used for collecting and conveying storm water 
runoff or a system of discharges from municipal separate storm sewers, 
except for those discharges from conveyances which do not require a 
permit under paragraph (a)(2) of this section or agricultural storm 
water runoff which is exempted from the definition of point source at 
Sec. 122.2. The Director may designate discharges from municipal 
separate storm sewers on a system-wide or jurisdiction-wide basis. In 
making this determination the Director may consider the following 
factors:
    (A) The location of the discharge with respect to waters of the 
United States as defined at 40 CFR 122.2;
    (B) The size of the discharge;
    (C) The quantity and nature of the pollutants discharged to waters 
of the United States;
    (D) Other relevant factors;
    (E) EPA shall only designate discharges from silvicultural 
activities into waters for which EPA is establishing the TMDL to ensure 
that the wasteload allocations and load allocations under the TMDL are 
achieved.
* * * * *
    (b) * * *
    (14) * * *
    (x) Construction activity including clearing, grading and 
excavation activities except: operations that result in the disturbance 
of less than five acres of total land area which are not part of a 
larger common plan of development or sale (This term does not include 
construction activity associated with silviculture, except rock 
crushing, gravel washing, log sorting, and log storage facilities);
* * * * *
    7. Amend Sec. 122.27 to revise paragraph (b)(1) to read as follows:


122.27  Silvicultural activities (applicable to State NPDES programs, 
see Sec. 123.25).

* * * * *
    (b) Definitions. (1) Silvicultural point source means any 
discernible, confined and discrete conveyance related to rock crushing, 
gravel washing, log sorting, or log storage facilities which are 
operated in connection with silvicultural activities and from which 
pollutants are discharged into waters of the United States. This term 
also includes discharges composed entirely of storm water from 
silvicultural activities that are designated under 40 CFR 
122.26(a)(1)(v) as requiring a 402 permit. Some activities (such as 
stream crossing for roads) may involve point source discharges of 
dredged and fill material which may require a CWA section 404 permit 
(See 33 CFR 209.120 and part 233).
* * * * *
    8. Amend Sec. 122.29 by revising paragraph (a)(3) to read as 
follows:


Sec. 122.29  New sources and new dischargers.

    (a) * * *
    (3) Existing discharger is defined in Sec. 122.2;
* * * * *
    9. Amend Sec. 122.44 to revise paragraph (d) introductory text and 
paragraph

[[Page 46089]]

(d)(1) introductory text to read as follows:


Sec. 122.44  Establishing limitations, standards, and other permit 
conditions (applicable to State NPDES programs, see Sec. 123.25).

* * * * *
    (d) Water quality standards and State requirements: any 
requirements in addition to or more stringent than promulgated effluent 
limitations guidelines or standards under sections 301, 304, 306, 307, 
318 and 405 of CWA necessary to:
    (1) Achieve water quality standards established under section 303 
of the CWA, including State narrative criteria for water quality and 
State antidegradation provisions.
* * * * *

PART 123--STATE PROGRAM REQUIREMENTS

    1. The authority for part 123 continues to read as follows:

    Authority: The Clean Water Act, 33 U.S.C. 1251 et seq.

    2. Amend Sec. 123.44 to add paragraph (k) to read as follows:


Sec. 123.44  EPA review of and objections to State permits.

* * * * *
    (k)(1) Where a State fails to submit a new draft or proposed permit 
to EPA within 90 days after the expiration of the existing permit, EPA 
may review the administratively-continued permit, using the procedure 
described in paragraphs (a)(1) through (h)(3) of this section, if:
    (i) The administratively-continued permit allows the discharge of 
pollutants into a waterbody for which EPA has established or approved a 
TMDL and the permit is not consistent with an applicable wasteload 
allocation; or
    (ii) The administratively-continued permit allows the discharge of 
a pollutant(s) of concern into a waterbody that does not meet water 
quality standards and for which EPA has not established or approved a 
TMDL.
    (2) To review an expired and administratively-continued permit 
under this subsection, EPA must give the State and the discharger at 
least 90 days notice of its intent to consider the expired permit as a 
proposed permit. At any time beginning 90 days after permit expiration, 
EPA may submit this notice.
    (3) If the State submits a draft or proposed permit for EPA review 
at any time before EPA issues the permit under paragraph (h) of this 
section, EPA will withdraw its notice of intent to take permit 
authority under this subsection and will evaluate the draft or proposed 
permit under this section.

PART 124--PROCEDURES FOR DECISIONMAKING

    1. The authority for part 124 continues to read as follows:

    Authority: Resource Conservation and Recovery Act, 42 U.S.C. 
6901 et seq.; Safe Drinking Water Act, 42 U.S.C. 300(f) et seq.; 
Clean Water Act, 33 U.S.C. 1251 et seq. Clean Air Act 42 U.S.C. 7401 
et seq.

    2. Section 124.7 is revised to read as follows:


Sec. 124.7  Statement of basis.

    EPA shall prepare a statement of basis for every draft permit for 
which a fact sheet under 124.8 is not prepared. The statement of basis 
shall briefly describe the derivation of the conditions of the draft 
permit and the reasons for them or, in the case of notices of intent to 
deny or terminate, reasons supporting the tentative decision. The 
statement of basis must also include the reasons for any determinations 
made, limitations derived or requirements set to satisfy the provisions 
under Sec. 122.4(j) of this chapter.
    3. Amend Sec. 124.56 by revising (b)(1)(ii); (b)(1)(iii) and 
(b)(1)(iv) and by adding paragraph (b)(1)(v) to read as follows:


Sec. 124.56  Fact sheets.

* * * * *
    (b)(1) * * *
    (ii) Limitations on internal waste streams under Sec. 122.45(i) of 
this chapter;
    (iii) Limitations on indicator pollutants under Sec. 125.3(g) of 
this chapter;
    (iv) Limitations set on a case-by-case basis under Sec. 125.3 
(c)(2) or (c)(3) of this chapter, or pursuant to Section 405(d)(4) of 
the CWA; or
    (v) Limitations and/or requirements derived to satisfy the 
provisions under Sec. 122.4(j) of this chapter.
* * * * *

PART 131--WATER QUALITY STANDARDS

    1. The authority citation for part 131 continues to read as 
follows:

    Authority: 33 U.S.C. 1251 et seq.

    2. Amend Sec. 131.12 to redesignate paragraph (a)(1) as paragraph 
(a)(1)(i) and add new paragraph (a)(1)(ii) to read as follows:


Sec. 131.12  Antidegradation policy.

    (a) * * *
    (i) * * *
    (ii) In order to authorize a new discharger or an existing 
discharger undergoing a significant expansion as defined in 40 CFR 
122.2, that is not a small entity as defined in 5 U.S.C. 601(6), to 
discharge into a waterbody that does not attain water quality standards 
the pollutant(s) causing the nonattainment and for which EPA has not 
approved or established a Total Maximum Daily Load for a pollutant(s) 
causing the nonattainment, reasonable further progress shall be made 
toward attaining the water quality standard. Reasonable further 
progress for these dischargers means, at a minimum, that any increase 
in mass loadings of the pollutant(s) causing the nonattainment will be 
offset by pollutant(s) load reductions of the pollutant(s) causing the 
nonattainment by a ratio of at least equal to 1.5:1.
    (A) The Director may determine that an offset in pollutant load 
reduction(s) at a ratio of less than 1.5:1, but more than 1:1, is 
sufficient to achieve reasonable further progress.
    (B) Where the Director determines that any offset may result in 
further degradation of water quality, the Director need not require an 
offset.
    (C) A discharger required to obtain an offset shall comply with the 
requirements under Sec. 122.4(j)(2) of this chapter.
* * * * *
[FR Doc. 99-21415 Filed 8-20-99; 8:45 am]
BILLING CODE 6560-50-P